PRECIOUS-Gold regains footing as U.S.-China tensions flare

* Gold down 0.4% so far this week
* Palladium eyes best week since end-March
* For an interactive graphic tracking the global coronavirus
spread, open https://tmsnrt.rs/3aIRuz7 in an external browser

(Updates prices)
By Swati Verma
May 22 (Reuters) - Gold gained on Friday as an escalation in
U.S.-China tensions underpinned bullion's safe-haven appeal,
although positive economic indicators after some countries eased
lockdowns set up the precious metal for a weekly drop.
After declining 1.4% on Thursday, spot gold XAU= rose 0.5%
at $1,734.27 per ounce by 0747 GMT. U.S. gold futures GCcv1
climbed 0.9% to $1,737.
Bullion had rallied to its highest since October 2012 on
Monday, but has since lost ground and is now heading for a 0.4%
weekly decline.
"The fundamentals are still supportive for gold. But, there
was a slight improvement in the manufacturing activity in Europe
and the U.S., the PMI data last night was slightly better," said
Avtar Sandu, a senior commodities manager at Phillip Futures.
The euro zone economy's contraction eased in May, the
Purchasing Manager Index (PMI) survey showed. Germany's private
sector recession also improved on loosening of lockdown curbs.
However, U.S.-China frictions dampened risk appetite,
supporting bullion and offsetting pressure on the metal's prices
from the slightly better data.
Asian shares fell after Beijing's plan to impose new
national security legislation on Hong Kong drew a warning from
U.S. President Donald Trump. MKTS/GLOB
Adding to uncertainties, China dropped its annual growth
target for the first time. Gold has held ground above the key $1,700 per ounce level,
building impetus to reach its 2011 peak in the coming quarters,
Fitch Solutions said in a note.
The lower-for-longer interest rates with quantitative easing
in full swing, macro and geopolitical uncertainty and strong
investor flows should continue to support gold prices on a 6-12
month horizon, Fitch added.
Palladium XPD= fell 0.2% to $2,008.93 per ounce, but was
looking to post its best week since the end of March.
Platinum XPT= slid 1.7% to $818.64 and silver XAG= eased
0.4% to $16.99.