Gold up on Syria concerns, set for second straight weekly gain

By Swati Verma

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

Spot gold was up 0.1 percent at $1,336.45 an ounce as of 0648 GMT, and was set for a weekly gain of 0.3 percent. U.S. gold futures eased 0.2 percent to $1,339.50 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 single-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.

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.

"It has to do with worries about the trade war and the geo-political concerns in the Middle-East," Xu said.

Holdings rose to their highest since June 2017 and were up about 3.5 percent so far this year, suggesting an increase in investor appetite for the metal, seen as a safe investment during times of financial and political uncertainties.

"Any further increase in gold ETF holdings could suggest that risk aversion is still on the table," Gan from OCBC said.

In other precious metals, spot silver rose 0.3 percent to $16.48 per ounce and up nearly 1 percent so far this week.

Platinum was 0.1 percent higher at $925.74 an ounce. For the week, the metal was set for an over 1 percent rise, the most in about two months.

Palladium climbed 0.6 percent at $969.45 an ounce and was on track for an over 7 percent rise this week, its best since atleast October 2017.

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