Gold firms as deepening U.S.-China rift lifts demand
* U.S.-China tensions over Hong Kong unnerve investors globally
* Palladium on track for biggest weekly gain since March
* Physical gold demand ticks up in Asian hubs
* For an interactive graphic tracking the global coronavirus spread, open https://tmsnrt.rs/3aIRuz7 in an external browser (Recasts, adds comments, updates prices)
By Eileen Soreng
May 22 (Reuters) - Gold gained on Friday as intensifying U.S.-China tensions compounded fears of a slow recovery in a global economy already reeling from the coronavirus pandemic.
Spot gold climbed 0.6% to $1,735.43 per ounce by 10:56 a.m. EDT (1456 GMT), after falling 1.4% on Thursday, and was headed for a small weekly decline. U.S. gold futures rose 0.8% to $1,736.20.
"China's aggressive stance on Hong Kong security could exacerbate already tense relations (with U.S.) and a possible confrontation between U.S. warships and Iranian freighters headed for Venezuela are key concerns heading into the long weekend, prompting investor buying," said Tai Wong, head of base and precious metals derivatives trading at BMO.
U.S.-China friction came to the fore again over the source of the coronavirus and escalated further with China's proposal to impose security laws on Hong Kong, drawing flak from Washington.
The tensions compounded fears of a slower global economic recovery, pressuring equity markets but supporting the U.S. dollar, also considered a safe haven. [MKTS/GLOB] [O/R] [USD/]
Heightening economic woes, Beijing dropped its annual growth target for the first time.
Gold, considered an insurance during political uncertainty, scaled an over 7-1/2 year peak earlier this week.
It has held its ground above the key $1,700 per ounce level, building impetus to reach its 2011 peak in the coming quarters, Fitch Solutions said in a note.
Lower-for-longer interest rates with quantitative easing in full swing, macro and geopolitical uncertainty and strong investor flows should continue to support gold on a six to 12 month horizon, Fitch said.
On the physical side, demand picked up in top Asian hubs as economies eased lockdowns. [GOL/AS]
Elsewhere, palladium fell 4.2% to $1,922.55 per ounce, but was on track for its strongest week since March.
Platinum rose 0.5% to $836.80 per ounce and silver was 0.7% higher at $17.17. (Reporting by Eileen Soreng in Bengaluru; Editing by Tom Brown) ((firstname.lastname@example.org; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: email@example.com)) Keywords: GLOBAL PRECIOUS/ (UPDATE 7)
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