June 25, 2018 / 11:23 AM / 6 months ago

PRECIOUS-Gold hovers near six-month lows as investors flock to U.S. Treasuries

    * Gold prices near six-month lows hit last week
    * Palladium drops to an eight-week low
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices, headline; adds comment, byline, NEW YORK to
dateline)
    By Renita D. Young and Zandi Shabalala
    NEW YORK/LONDON, June 25 (Reuters) - Gold hovered near last
week's six-month low on Monday as investors flocked to U.S.
Treasuries rather than bullion, amid concerns over a global
trade war ratcheting higher after a report said the United
States plans to bar Chinese companies from investing in its
technology firms.
    Spot gold        was down 0.2 percent at $1,266.29 per ounce
by 1:35 p.m. EDT (1735 GMT). 
    U.S. gold futures         for August delivery settled down
$1.80, or 0.1 percent, at $1,268.90 per ounce. 
    Palladium        was down 2 percent at $937.70 an ounce. The
metal earlier slipped to $936.25 an ounce, its lowest since
April 10.
    The U.S. Treasury Department is crafting rules that would
block firms with at least 25 percent Chinese ownership from
buying U.S. companies involved in "industrially significant
technology," The Wall Street Journal reported on Sunday.
            
    Gold, which is traditionally seen as a safe haven in times
of geopolitical uncertainty, has failed to benefit as investors
poured into U.S. Treasury debt.
    "Right now, the flight-to-quality money is going into the
bonds," said Bob Haberkorn, senior market strategist at RJO
Futures. "Commodities on a whole are being pulled back with the
threat of tariffs."
    The U.S. Treasury yield curve flattened to its lowest level
in over 10 years as concerns about trade wars and divisions
within the euro zone boosted demand for longer-dated, safe-haven
debt.       
    Higher U.S. bond yields make gold a less attractive
investment since it does not bear interest.
    But some analysts say the standoff between the world's two
largest economies, which threatens to limit global economic
growth, could eventually benefit gold.
    Danske Bank analyst Jens Pedersen there was a risk-off mood
in the commodities space on Monday. 
    "Today on a relative basis, gold is performing better than
commodities and equities," he added. 
    Global shares fell on escalating trade tensions and the 
dollar index        turned softer against a basket of
currencies.                   
    "The fundamental dynamics suggest gold will remain under
pressure until there is a discernible reversal in dollar
sentiment," said Peter Hug, Global Trading Director at Kitco
Metals.
    "We are seeing some support lining up at the $1,265 level,
with upward momentum capped at the $1,278 area," he said.
    Meanwhile, silver        fell 0.8 percent at $16.31 an
ounce.
    Platinum        lost 0.7 percent to trade at $867.20 an
ounce. It touched $851.74, the weakest since February 2016, in
the previous session.

 (Additional reporting by Karen Rodrigues in Bengaluru; Editing
by Jan Harvey)
  
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