Gold prices rise on weaker dollar, trade tension

By Karen Rodrigues

BENGALURU (Reuters) - Gold prices rose on Thursday, as the dollar eased from 6-1/2-month highs hit earlier this week, with prices further supported by concerns over U.S.-China trade.

Spot gold rose 0.4 percent to $1,305.87 per ounce by 0652 GMT, but was down 0.7 percent for the month, in what could be its second straight monthly decline.

U.S. gold futures for June delivery were 0.3 percent higher at $1,305.80 per ounce.

"Gold is largely being influenced by how the dollar is moving and the dollar move overnight is a clear representation of why gold prices have risen this morning," said OCBC analyst Barnabas Gan.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.3 percent to 93.873. It touched its highest since early November at 95.025 on Tuesday.

A weaker dollar makes bullion cheaper for holders of other currencies.

"Prices are still very dependent on how risk aversion is playing up and the global news surrounding the U.S.-Sino trade tensions as well as the possibility of a North Korea summit, that uncertainty is a big driver for gold prices," Gan added.

China said on Wednesday it was ready to fight back if Washington was looking for a trade war, days ahead of a planned visit by U.S. Commerce Secretary Wilbur Ross.

Meanwhile, U.S. and North Korean officials met in New York late on Wednesday in the first of two days of talks about the future of Pyongyang's nuclear weapons program and a possible summit between U.S. President Donald Trump and North Korean leader Kim Jung Un.

U.S. economic growth slowed slightly more than initially thought in the first quarter as consumer spending rose at its weakest pace in nearly five years.

However, tensions over Italy cooled as the country's two main anti-establishment parties renewed efforts to form a government, reducing the prospect of a general election, which had stoked fears that such a vote will effectively be a referendum on the country's euro membership.

"An inherent weakness in the greenback, heightened risks in the global financial system and geopolitical uncertainty will cement safe-haven demand for the longer term," Benjamin Lu, a commodities analyst at Singapore-based broker Phillip Futures, said in a note.

In other precious metals, spot silver rose 0.4 percent to $16.58 an ounce and platinum gained 0.7 percent to $912.40 an ounce.

Both the metals were headed for a monthly rise of about 1 percent, their biggest since January.

Palladium was 0.2 percent higher at $987 an ounce and was headed for its biggest monthly gain since December, climbing over 2 percent.

(Reporting by Karen Rodrigues in Bengaluru; editing by Amrutha Gayathri and Subhranshu Sahu)