* Palladium slides to seven-week low
* Dollar rises to over two-year high
* Investors await U.S. non-farm payrolls report on Friday (Adds comments, updates prices)
By K. Sathya Narayanan
Aug 1 (Reuters) - Gold rose nearly 2% on Thursday after U.S. President Donald Trump said he would impose additional tariffs on Chinese imports, renewing trade tensions between the two countries, dragging the dollar down from two-year highs and sending bond yields lower.
Separately, palladium prices slumped more than 6% on technical selling.
Trump said on Thursday he would impose an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1, as talks aimed at easting tensions between the world’s two largest economies continue.
Spot gold rose 1.9% to $1,440.02 per ounce as of 2:14 p.m. EDT (1814 GMT), while U.S. gold futures rose nearly 1% to $1,450.90.
“Trump just came out and said he is announcing a 10% tariff on China that sunk the dollar index and brought some safe-haven demand for gold,” said Jim Wyckoff, senior analyst with Kitco Metals.
Earlier this session, bullion fell to its lowest since July 17 at $1,400.31 as the dollar surged after the U.S. Federal Reserve doused expectations of further monetary policy easing.
Gold held above the key $1,400 level and bargain hunters stepped in to buy the dips, Wyckoff added.
Though the U.S. central bank slashed its benchmark interest rate on Wednesday for the first time in a decade, gold prices fell as much as 1.2% after Fed Chair Jerome Powell signaled further sharp cuts were not imminent.
The U.S. dollar fell 0.2%, while the U.S treasury yields across maturities dropped after Trump’s tariff tweets, hitting session lows. The dollar index had earlier risen to its highest against other major currencies since May 2017.
“Some people positioned for a more robust expression of dovishness from Fed and they didn’t get it. Gold responded to the fact that there is a lot of ambiguity now on how the Fed will tackle the monetary policy going forward,” said Bart Melek, head of commodity strategies at TD Securities in Toronto.
Lower interest rates and resurgent investor and central bank buying are expected to help gold prices cement recent gains and hold above $1,400 an ounce next year, a Reuters poll showed on Thursday.
Market participants are now awaiting the release of U.S. non-farm payrolls data on Friday.
In other precious metals, spot palladium fell to a seven-week low of $1,410 per ounce earlier this session. The metal was last down 6.3% at $1,420.53.
An analyst in New York cited investors liquidating positions in the metal after prices breached a key technical level of $1,490, adding, weak auto sales in China further pressured the market.
Platinum was down 1% at $851.09 an ounce, while Silver was down 0.1% at $16.24 per ounce. (Reporting by K. Sathya Narayanan in Bengaluru; Editing by David Gregorio and Steve Orlofsky)