March 6, 2018 / 4:00 AM / 8 months ago

PRECIOUS-Gold prices gain on softer dollar due to trade war fears

    * Spot gold may retest support at $1,316/oz - technicals
    * Trump faces backlash on tariff imposition

 (Adds comments, updates prices)
    By Eileen Soreng
    March 6 (Reuters) - Gold prices edged up on Tuesday on a
softer dollar and as investors covered short positions amid
jitters about a global trade war due to U.S. President Donald
Trump's plan to impose steel and aluminum tariffs.
    Spot gold        was up 0.1 percent at $1,321.05 per ounce
as of 0746 GMT, while U.S. gold futures         for April
delivery rose 0.2 percent to $1,321.90 per ounce.
    Spot gold has gained over $20 since March 1 when it touched
its lowest in two months at $1,302.61 per ounce. 
    "The area $1,300 is an important support and it does not
seem likely to fall below this area in the next few days, unless
the U.S. dollar could manage to strongly recover," said
ActivTrades analyst Carlo Alberto de Casa.
    The dollar index       , which measures the greenback
against a basket of major currencies, eased 0.1 percent at
90.004. The currency tumbled to 16-month lows against the
safe-haven yen late last week as concerns about a trade war
gripped markets after Trump announced his plan for steel and
aluminum tariffs.       
    "A lot of gold's movement of late has been driven by Trump's
actions. Market watchers are closely watching what he is going
to say and do as no one knows what he is actually going to do,"
said OCBC analyst Barnabas Gan.
    "The threat of the steel and aluminum tariff materialising
is still a possibility and that's why gold prices will be
trading around these levels."
    Trump refused to back down from his decision to levy tariffs
on imported steel and aluminum tariffs despite a backlash from
trade allies.             
    "In the near term, given the unpredictable nature of current
market sentiment, investors will continue to buy gold on dips to
hedge the growing tail risk from Trump's controversial
policies," said Stephen Innes, APAC trading head at OANDA.
    Worries have eased this week, however, as pressure to back
off from plans to implement new tariffs grew and as market
participants came to view Trump's proposed tariffs more as a
negotiating tactic than a hard policy proposal.
    Trump was expected to finalise the planned tariffs later in
the week, although some observers familiar with the process said
it could occur next week.
    Asian shares regained some ground on Tuesday as investor
worries about an imminent trade war eased.            
    Spot gold may retest a support at $1,316 per ounce, as it
may have completed a bounce from the March 1 low of $1,302.61,
according to Reuters technical analyst Wang Tao.             
    In other precious metals, silver        was down 0.1 percent
at $16.41 per ounce.
    Platinum        fell 0.3 percent to $957.74 per ounce, while
palladium        was down 0.2 percent at $981.00 per ounce.

 (Reporting by Eileen Soreng in Bengaluru; editing by Richard
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