April 10, 2018 / 4:03 AM / 15 days ago

PRECIOUS-Gold dips as Xi comments revive risk appetite

    * Dollar gains versus yen after two sessions of losses
    * U.S. stock futures rally, Asian shares bounce back

 (Adds analysts comments, detail, and updates prices)
    By Swati Verma
    BENGALURU, April 10 (Reuters) - Gold prices erased early
gains to trade lower on Tuesday after Chinese President Xi
Jinping promised to lower import tariffs on certain products,
helping soothe fears over an escalating trade row with the
United States.
    Xi promised to open the country's economy further and lower
import tariffs on products including cars. His comments sent
U.S. stock futures, the dollar and Asian shares higher.
                            
    This dampened the appeal of gold, which is priced in
dollars, as investors' appetite for risky assets surged.
    Spot gold        was down 0.1 percent at $1,334.70 an ounce
as of 0727 GMT, having risen to a near one-week high of
$1,338.12 earlier in the session.
    U.S. gold futures         dropped 0.2 percent to $1,337.80
an ounce.
    "The risk-aversion demand in the past few weeks has been
very positive for gold, but I don't think what President Xi has
been saying is going to affect gold that much… we will have to
wait for U.S. President Donald Trump, he is a bit
unpredictable," said Mark To, head of research, Hong Kong's Wing
Fung Financial Group.
    Gold is often seen as an alternative investment during times
of political and financial uncertainty.
    "What is happening now in Syria and Trump's reaction to that
will have a more direct impact on gold prices than Xi's speech,
which is being viewed as a very rational long-term strategy for
China," To added.
    Trump on Monday promised quick, forceful action in response
to a deadly suspected chemical weapons attack in Syria,
appearing to suggest a potential military response.             
            
    "We do not expect trade tensions between the United States
and China to escalate into a trade war," ABN Amro analyst
Georgette Boele said in a note on Monday, adding that gold
prices could drop below the $1,300 per ounce level in the coming
weeks. 
    "A U.S. dollar recovery in an environment of lower trade and
political tensions combined with Fed rate hikes should be
responsible for such weakness."
    Markets are looking ahead to this week's Federal Reserve's
minutes on its last policy meeting and U.S. CPI data for cues on
the pace of interest rate hikes this year.
    In other precious metals, silver        gained 0.2 percent
to $16.48 an ounce.
    Platinum        climbed 0.2 percent to $933.45 an ounce,
after gaining about 2 percent in the previous session, the most
in nearly two months.
    Palladium        rose 0.4 percent to $933 an ounce. The auto
catalyst metal gained over 3 percent on Monday, its daily
biggest percentage rise since Jan. 12.

 (Reporting by Swati Verma and Eileen Soreng in Bengaluru;
Editing by Subhranshu Sahu and Sherry Jacob-Phillips)
  
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