April 14, 2017 / 10:49 AM / 9 months ago

PRECIOUS-Gold heads for best week since June on Korea, MidEast jitters

    * Markets closed for holidays in much of Europe, U.S.
    * No. 1 gold ETF sees biggest 1-day inflow in a month
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Releads, updates prices)
    By Jan Harvey
    LONDON, April 14 (Reuters) - Gold eased back from the
previous day's five-month high on Friday, but stayed on track
for its strongest week since June as concerns over North Korea
and the Middle East sent investors scurrying for the safety of
bullion and the dollar wilted.
    Market liquidity was thin due to Good Friday and Passover
holiday observances around the world. The market for U.S.
Treasuries finished trading early on Thursday, and will be
closed on Friday.
    Spot gold        was $1,284.81 an ounce at 1435 GMT, down
0.2 percent. Prices peaked on Tuesday at $1,288.64 an ounce,
their highest since early November.
    "The further deterioration in the U.S. relationship with
Russia and North Korea this week has supported the prices of
precious metals," Capital Economics said in a weekly note.
    "A weaker dollar, in light of President Trump's comments
about the risk to the U.S. economy from a rise in the dollar,
has also helped to boost the price of gold."
    The world's biggest gold-backed exchange-traded fund, New
York-listed SPDR Gold Shares      , said its holdings rose more
than six tonnes on Thursday, its biggest one-day inflow in a
month, as investors bought into the metal.
    The dollar nursed losses on Friday, heading for its first
losing week in three, as continuing tensions in North Korea
underpinned currencies seen as safer, such as the Japanese yen.
    China said on Friday tension over its neighbour North Korea
had to be stopped from reaching an "irreversible and
unmanageable stage", as a U.S. aircraft carrier group headed for
the region.             
    Uncertainty over U.S. President Donald Trump's policy
towards North Korea, which has conducted missile and nuclear
tests in defiance of sanctions, have been growing since the U.S.
Navy fired 59 Tomahawk missiles at a Syrian airfield last week.
    "It's very hard to decide which direction gold will go right
now," one trader with a Shanghai-based bullion bank said. "If
Trump is to perform some military action against North Korea,
gold will definitely reach $1,300."
    Adding to political concerns, the U.S. military said on
Thursday that it dropped the largest non-nuclear device it has
ever used in combat on a network of caves and tunnels used by
Islamic State in eastern Afghanistan.             
    Silver        was up 0.1 percent at $18.52 an ounce, after
touching a five-month high of $18.599 in the previous session. 
    Platinum        was up 0.2 percent at $971.15 and palladium
       was 0.1 percent higher at $795.08.

 (Additional reporting by Swati Verma in Bengaluru; Editing by
Hugh Lawson and Susan Thomas)
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