March 23, 2018 / 11:51 AM / 4 months ago

PRECIOUS-Gold jumps as possible global trade war shakes markets

    * U.S. tariffs could hit up to $60 bln of Chinese goods
    * Trump signs spending bill, but after veto threat
    * Global stocks, U.S. dollar fall
    * Gold up 2.8 percent this week
    * Platinum's discount to gold at highest since 1985

 (Updates prices, headline; adds comment, additional byline NEW
YORK to dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, March 23 (Reuters) - Gold prices surged to
a one-month high on Friday as the threat of a global trade war
sent investors scrambling for safe assets.
    U.S. President Donald Trump signed a memorandum that could
impose tariffs on up to $60 billion of imports from China,
prompting Beijing to urge the United States to "pull back from
the brink".                         
    The tariffs have a 30-day consultation period, leaving room
for compromise, but investors are concerned that a trade war
could develop with potentially dire consequences for global
growth. 
    Spot gold        gained 1.6 percent at $1,349.56 per ounce
by 1:33 p.m. ET (1733 GMT), having hit its highest since Feb. 19
at $1,350.20. 
    U.S. gold futures         for April delivery settled up
$22.50, or 1.7 percent, at $1,349.90 per ounce. 
    Global markets were further rattled by Trump's appointment
of John Bolton as national security adviser. Bolton has
previously advocated using military force against North Korea
and Iran.                                      
    Adding to the turmoil, there was a period of suspense on
Friday after Trump threatened to veto the $1.3 trillion spending
bill passed by Congress, raising the specter of a government
shutdown. He later signed the bill.             
    The U.S. dollar and U.S. bond yields were also lower.       
     
    "There are tensions all over the place. There’s the U.S.
tensions, Trump and Congress clearly clashing with a lot of
disagreements. The fact that gold has not really attracted much
interest during this whole period finally caught up today," said
Bill O'Neill, partner at Logic Advisors.
    Gold is traditionally seen as a safe place to park assets in
times of uncertainty. 
    Dollar-denominated bullion is also helped by a weaker U.S.
currency and by lower bond yields, which make non-yielding gold
more attractive to investors.
    Gold prices began rising strongly this week after the U.S.
Federal Reserve gave guidance on the pace of interest rate rises
that was less aggressive than some investors had expected.
            
    Higher interest rates push up bond yields and tend to
strengthen the dollar, so a slower pace of increases to interest
rates is good for gold prices.
    Gold was up 2.8 percent this week, the biggest weekly gain
since April 2016.
    "The market is now looking once again to the key area of
$1,360-$1,370, the maximum reached by gold in the past four
years," said ActivTrades analyst Carlo Alberto De Casa. 
    Meanwhile, silver        gained 1.4 percent at $16.59 an
ounce, its highest since March 9, up 1.5 percent this week.
    Platinum        rose 0.3 percent at $950.20, set for a
weekly gain of 0.7 percent. 
    Palladium        lost 0.4 percent at $976.30 per ounce, down
2 percent on the week.

 (Additional reporting by Eileen Soreng in Bengaluru
Editing by David Goodman and Frances Kerry)
  
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