July 6, 2018 / 3:51 AM / 10 days ago

PRECIOUS-Gold trims losses on soft dollar after U.S. tariffs take effect

    * Spot gold up 0.3 percent for the week
    * Tariffs on $34 bln of Chinese goods kick in 
    * Investors eye China's response
    * U.S. jobs data due at 1230 GMT

 (Adds comment, detail; updates prices)
    By Apeksha Nair and Karen Rodrigues
    BENGALURU, July 6 (Reuters) - Gold prices narrowed losses on
Friday as U.S. tariffs on Chinese imports weighed on the
greenback, stoking fears of a full-blown trade war between the
two leading economies.  
    China has implemented additional tariffs on some import
products from the United States immediately after U.S. tariffs
on $34 billion in Chinese imports took effect, state media
reported.                          
    "If the trade war escalates and then China could sell U.S.
treasuries and buy gold. This would be a big event," said Helen
Lau, analyst, Argonaut Securities.
    Spot gold        was 0.1 percent lower at $1,256.54 an ounce
by 0702 GMT, having dropped to $1,252.15 earlier in the session.
    The bullion was, however, headed for its first weekly gain
in four.
    U.S. gold futures         for August delivery slipped 0.1
percent to $1,257.50 an ounce.  
    The dollar eased against its peers on Friday ahead of the
key U.S. jobs report later in the day and investor caution
prevailed in global markets with focus turning to retaliatory
measures China could employ. 
    China has no choice but to fight back against U.S. bullying
on trade, the country's Commerce Ministry said on Friday. 
             
    "Traders are extremely cautious when it comes to gold. The
intraday price-action has a bullish set-up and shows that the
price has potential to test the level of $1,280 in the coming
days if the dollar weakness continues," ThinkMarkets chief
market analyst Naeem Aslam said.
    Meanwhile, U.S. central bankers discussed whether recession
lurked around the corner and expressed concerns global trade
tensions could hit an economy that by most measures looked
strong, minutes of the Federal Reserve's last policy meeting on
June 12-13 released on Thursday showed.             
    The minutes described a meeting in which the Fed raised
interest rates for the second time this year. It also suggested
policymakers might soon signal the central bank's rate-hiking
cycle was advanced enough that policy was no longer boosting or
constraining the economy. 
    "I take the view the Fed will take a modestly dovish line,
while trade tariff uncertainties persist. Gold is oversold, so I
expect it to rally somewhat while interest rate expectations
soften, perhaps to one more instead of two quarter point
increases this year," said Alasdair Macleod, head of research
with Toronto-based Goldmoney Inc.
    Among other precious metals, silver        climbed 0.5
percent to $16.06 an ounce.
    Palladium        slipped 0.2 percent to $945.97 an ounce,
while platinum        gained 0.3 percent to $842.70.
    All three metals were headed for their fourth straight
weekly decline.

 (Reporting by Apeksha Nair and Karen Rodrigues in Bengaluru,
Editing by Joseph Radford and Sherry Jacob-Phillips)
  
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