PRECIOUS-Gold gains as U.S.-China tensions boost safe-haven demand

* U.S.-China tensions over Hong Kong unnerve investors
globally
* Palladium on course for strongest 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 Brijesh Patel
May 22 (Reuters) - Gold prices rebounded on Friday as
escalating tensions between the United States and China lifted
bullion's safe-haven appeal, though a stronger U.S. dollar kept
gains in check.
Spot gold XAU= was up 0.4% at $1,732.60 per ounce by 1217
GMT, after falling 1.4% on Thursday. U.S. gold futures GCv1
rose 0.7% to $1,734.
U.S.-China tensions have risen in the past few weeks over
the source of the coronavirus pandemic, and China's proposal on
Thursday to impose security laws on Hong Kong prompted a strong
warning from U.S. President Donald Trump. "Given the fact that most of the equity markets and other
commodities are under pressure right now, the uncertainty around
the situation in China and the trade relationship with the U.S.
is helping gold," said Commerzbank analyst Eugen Weinberg.
The tensions compounded fears of a slower global recovery
from the economic damage wrought by the coronavirus crisis,
pressuring equity markets but supporting the safe-haven U.S.
currency. MKTS/GLOB O/R
The dollar index .DXY jumped 0.5% against its rivals,
limiting gold's advance. USD/
Beijing dropped its annual growth target for the first time,
highlighting the uncertainty around economic growth that has
stalled due to the coronavirus. Gold, which is used as an insurance during times of
political uncertainty, rose to a more than 7-1/2 year peak
earlier this week.
It has held its 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.
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 said.
Elsewhere, palladium XPD= fell 1.8% to $1,977.04 per
ounce, but was still on track for its strongest week since
March.
Platinum XPT= rose 0.1% to $833.34 per ounce, while silver
XAG= fell 0.1% to $17.04.