Gold rises on Syria concerns, on track for second week of gains

By Swati Verma

BENGALURU (Reuters) - Gold rose on Friday and was set to post a small gain for a second week running, supported by tensions over Syria.

Spot gold rose 0.4 percent to $1,339.71 an ounce as of 0324 GMT, and was set for a weekly gain of 0.5 percent. U.S. gold futures were up 0.1 percent at $1,342.70 an ounce.

Spot gold is expected to rise to $1,348 per ounce, as it has found a support at $1,334, said Reuters' technical analyst Wang Tao.

Prices are gaining on tensions over Syria, that has stoked geopolitical concerns, said Richard Xu, a fund manager at HuaAn Gold, China's biggest gold exchange-traded fund.

President Donald Trump and his national security aides on Thursday discussed U.S. options on Syria, where he has threatened missile strikes in response to a suspected poison gas attack, as a Russian envoy voiced fears of wider conflict between Washington and Moscow.

Trump, however, cast doubt over the timing of his threatened strike on Syria on Thursday, by tweeting that an attack on Syria "could be very soon or not so soon at all."

Global stocks recovered and the dollar firmed after Trump's comments, which weighed on the dollar-denominated bullion.

Gold prices dropped 1.3 percent on Thursday, the biggest one-day percentage fall since March 28. Prices have fallen over$25 an ounce since climbing to an 11-week high of $1,365.23 an ounce on Wednesday.

Easing concerns over the trade war between China and the United States also weighed on gold prices in the previous session.

"Going forward I see downside risk for gold prices in general, the ebbing trade war concerns as well as improvement in growth-related news should bring safe-haven demand lower into the year ahead," said OCBC analyst Barnabas Gan.

U.S. President Donald Trump said on Thursday that the trade "negotiations" between Washington and Beijing were going well, conflicting with Chinese official statements on the dispute.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.69 percent to 865.89 tonnes on Thursday.

In other precious metals, platinum was 0.2 percent higher at $926.74 an ounce.

Palladium was up 0.5 percent at $968.50 an ounce and on track for an over 7 percent rise this week.

Spot silver rose 0.4 percent to $16.49 per ounce.

Global silver physical demand dropped to its lowest level in five years during 2017, led largely by a steep decline in coin and bar demand, even as industrial demand increased, according to Thomson Reuters GFMS.

(Reporting by Swati Verma in Bengaluru; editing by Richard Pullin and Sunil Nair)