PRECIOUS-Gold eyes best day in 3-months as China hits back over U.S. tariffs

* Gold breaches key $1,300/oz for the first time since April
11
* China to impose tariffs on $60 billion of U.S. goods
* Palladium to narrow annual deficit in 2019 -Metals Focus

(Updates prices)
By Brijesh Patel
May 13 (Reuters) - Gold prices climbed and were on track for
their best day in nearly three months on Monday as investors
sought a safe haven from market turmoil triggered by China
announcing that it will retaliate over levies imposed by the
Trump administration.
Spot gold XAU= climbed 1.1% to $1,299.30 per ounce as of
1:44 p.m. EDT (1744 GMT), after hitting $1,301.10, its highest
since April 11. The metal was on track to mark its biggest
one-day percentage rise since Feb. 19.
U.S. gold futures GCcv1 settled 1.1% higher at $1,301.80
an ounce.
"We are seeing safe-heaven buying right now with the
breakdown in trade talks and China talking about retaliating,"
said Phillip Streible, senior commodities strategist at RJO
Futures.
"Geopolitical risks are rising, trade tensions escalating,
the dollar is down and equities are really under pressure - all
these factors are boosting gold prices right now."
China said on Monday it would hike tariffs on a range of
U.S. goods, striking back in its trade war with Washington
shortly after U.S. President Donald Trump warned it not to
retaliate. The move weighed on equity markets worldwide and pushed the
U.S. longer-dated Treasury yields to six-week lows. MKTS/GLOB
US/
The dollar index .DXY also fell to over a three-week
trough, making gold cheaper for holders of other currencies.
USD/
The metal had earlier hit a session low of $1,281.35 an
ounce as mounting trade concerns weighed on the yuan, denting
demand in the world's biggest buyer of the metal, China. The
Chinese currency dropped to its lowest level against the U.S.
dollar since December. FRX/
"Gold had lagged early, but the Chinese tariff announcement
put more pressure on equity futures," said Tai Wong, head of
base and precious metals derivatives trading at BMO.
"So this is speculative buying based on lower stocks and
lower yields with a technical break on the upside adding
momentum."
On the investment side, speculators raised their net-long
position in gold in the week ended May 7. CFTC/
Meanwhile, holdings of SPDR Gold Trust GLD , the world's
largest gold-backed exchange-traded fund, fell 0.9 percent on
Friday. GOL/ETF
In other precious metals, silver XAG= was up 0.1% at
$14.77 an ounce.
Platinum XPT= fell 1.5% to $847.90 per ounce, while
palladium XPD= dropped 2.5% to $1,323.51.
Palladium will narrow its deficit in 2019 compared with
last year, while platinum's surplus is seen nearly doubling,
said research group Metals Focus. The World Platinum Investment Council (WPIC), however, said
that a surge in investment demand has reduced expectations of a
large surplus in the platinum market this year.