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PRECIOUS-Gold prices edge up amid trade war worries
Published at 12/07/2018 at 08:30

* Trade war fears support safe-haven demand for gold

* Silver slips to weakest since December

* Platinum falls to one-week low

(Adds comment, detail; updates prices)

By Karen Rodrigues

BENGALURU, July 12 (Reuters) - Gold prices edged up on Thursday, snapping two sessions of declines amid worries over the intensifying trade war between the United States and China.

Spot gold was up 0.2 percent at $1,244 an ounce at 0650 GMT. In the previous session, it slipped 1 percent to hit its lowest in over a week at $1,240.89.

U.S. gold futures for August delivery were little changed at $1,244 an ounce.

"Today is again one of those days where trade war concerns have brought (some) interest for gold," said Naeem Aslam, chief market analyst.

"We know for certain that Trump is serious with respect to trade tariffs on China. Once again, the counter reaction from China is expected and that itself would have tendency to escalate the tensions further. So maybe stay bullish on gold for a little longer."

Stocks and commodities recovered slightly on Thursday as markets consolidated from the previous session's steep losses, when fears of an escalation in the U.S.-China trade war jolted investor sentiment.

China accused the United States of bullying and warned it would hit back after the Trump administration raised the stakes in their trade dispute, threatening 10 percent tariffs on $200 billion of Chinese goods in a move that rattled global markets.

"The precious metal (gold) looks likely to edge up today as buying activities commence as prices hover above key support levels for now," Benjamin Lu, a commodities analyst at Singapore-based broker Phillip Futures, said in a note.

Investors often turn to bullion as a so-called safe haven in times of economic or political uncertainty.

Meanwhile, the dollar rose to a six-month high against the yen and steadied against other major peers on Thursday after U.S. inflation data reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year.

"The further escalation of the trade war is mutually destructive given the higher U.S. consumer prices as a result of import tariffs, which in turn could fuel risk of a faster-than-expected Fed rate hike in the foreseeable horizon," OCBC said in a note.

A stronger dollar and higher interest rates reduce demand for non-interest bearing gold as the metal becomes more expensive for holders of other currencies.

Among other precious metals, silver was 0.7-percent higher at $15.86 an ounce. Earlier in the session it fell to its lowest since mid-December at $15.72 an ounce.

Platinum was up 0.3 percent at $827.30 an ounce, after falling to an over one-week low at $821.25 earlier, while palladium was 0.1-percent higher at $938.80 per ounce.

(Reporting by Karen Rodrigues in Bengaluru; Editing by Sunil Nair and Joseph Radford)

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