PRECIOUS-Gold hits over three-week high as Sino-U.S. tensions heat up

(Updates prices, gold milestone)
* Gold set for its biggest weekly gain in three
* Palladium faces seventh straight weekly loss
* U.S. economy will not regain lost ground in 2H 2020
-survey
* For an interactive graphic tracking the global coronavirus
spread, open https://tmsnrt.rs/3aIRuz7 in an external browser

By Harshith Aranya
May 15 (Reuters) - Gold hit its highest in more than three
weeks on Friday as Sino-U.S. relations took a turn for the worse
and investors fretted that the economy would take longer than
expected to recover from a coronavirus-induced slump.
Spot gold XAU= gained 0.4% to $1,735.67 per ounce by 0616
GMT, having earlier touched its highest since April 23 at
$1,737.50. U.S. gold futures GCcv1 rose 0.3% to $1,746.20.
"It's been clear, as more economic data is released, that
some of the damage that has been done (to the global economy)
would take much longer to repair than expected," said Michael
McCarthy, chief strategist at CMC Markets.
It is becoming increasingly apparent that a snap-back or a
V-shaped economic recovery is very unlikely, McCarthy said,
adding that this meant interest rates would stay low for longer,
enhancing bullion's appeal.
Non-yielding bullion tends to gain in a low-interest
environment and when economic uncertainties rise.
An already dismal near-term U.S. economic outlook has
darkened further, a Reuters survey showed. While a recovery is
still forecast in the second half of the year, it won't come
close to regaining the ground it lost this year. British manufacturers also think they will take longer to
recover from the economic impact of COVID-19 than just a couple
of weeks ago, according to an industry survey. Gold has gained about 2% so far this week, poised for its
biggest weekly gain in three, supported by signs of prolonged
economic weakness and as tensions between the United States and
China flared up.
U.S. President Donald Trump said on Thursday the pandemic
had cast a pall over his January trade deal with China, and
suggested he could even cut ties with Beijing. "Markets are very concerned... Any turning up of the heat
between these two nations could be bad news for everyone but
good news for gold," McCarthy said.
Reflecting investor sentiment, SPDR Gold Trust GLD
holdings, the world's largest gold-backed exchange-traded fund,
rose 1.15% to 1,104.72 tonnes on Thursday. GOL/ETF
Among other precious metals, palladium XPD= gained 0.3% to
$1,840.86 an ounce, but was on track to post its seventh
straight weekly drop.
Platinum XPT= rose 0.4% to $770.88 per ounce. Silver
XAG= jumped 2.5% to $16.26 an ounce and was set to mark its
biggest weekly gain in five.

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For an interactive graphic tracking the global spread, open link
in an external browser https://tmsnrt.rs/3aIRuz7
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