PRECIOUS-Gold gains as U.S.-China trade concerns lift safe-haven demand

* Silver hits $18/oz for the first time in two years
* Markets anticipate 25 basis point cut by U.S. Fed

(Updates prices)
By Brijesh Patel
Aug 27 (Reuters) - Gold rose on Tuesday as uncertainty over
the U.S.-China trade dispute kept investors on edge and drove
inflows into the safe haven metal.
Spot gold XAU= was up 0.4% at $1,531.28 per ounce, as of
1217 GMT. During trading on Monday, the metal had hit its
highest level since April 2013 at $1,554.56.
U.S. gold futures GCcv1 were up 0.3% at $1,541.60.
"It's clear that the main focus is on the U.S.-China
developments. Reports from China on the trade front indicate we
are nowhere near any change in the current standoff on trade,"
Saxo Bank commodity strategist Ole Hansen said.
"And with the growth numbers in Germany pointing to a
recession, there's not much of an excuse to sell gold if you are
holding any, keeping the market more or less unchanged even
though we had a toning down of the confrontational tone on
trade," he said.
U.S. President Donald Trump had on Monday predicted a trade
deal was coming with China, but Beijing did not confirm reports
of a phone call between the two sides. Washington announced last week an additional 5% duty on $550
billion in targeted Chinese goods, hours after China unveiled
retaliatory tariffs on $75 billion worth of U.S. products.
"Overall, if trade tensions remain elevated, gold can count
on this issue as being flat out supportive," VM Markets Managing
Partner Stephen Innes said in a note.
Supporting gold, the dollar .DXY eased 0.2% on Tuesday,
making the metal cheaper for investors holding other currencies,
USD/
Meanwhile, the offshore Chinese yuan, which is sensitive to
U.S.-China trade disputes, was lower on Tuesday after weakening
to a record low of 7.1870 against the dollar the day before.
Adding to uncertainty over the health of the global economy,
data showed Germany's economy contracted on weaker exports in
the second quarter. Markets have priced in a quarter-point cut in interest rates
by the U.S. Federal Reserve next month, and over 100 basis
points of easing by the end of next year. FEDWATCH
Lower U.S. interest rates put pressure on the dollar and
bond yields, increasing the appeal of non-yielding bullion.
Elsewhere, silver XAG= jumped nearly 2% to hit $18 an
ounce for the first time since early September 2017.
Platinum XPT= gained 0.8% to $861.72 an ounce and
palladium XPD= climbed 0.6% to $1,482.93 .