PRECIOUS-Gold rises on fears about second wave of infections

(Updates prices, adds statement from China's health authority)
* Asian equities fall on fears of coronavirus resurgence
* U.S. dollar hits more than 2-week high
* For an interactive graphic tracking the global spread,
open https://tmsnrt.rs/3aIRuz7
in an external browser

By Harshith Aranya
May 12 (Reuters) - Gold rose on Tuesday on growing fears of
a coronavirus resurgence in some countries and prospects of
Sino-U.S. tensions flaring further, though gains were capped by
a stronger dollar.
Spot gold XAU= was up 0.4% at $1,702.69 per ounce by 0804
GMT. U.S. gold futures GCv1 climbed 0.5% to $1,705.90 per
ounce.
The new wave of infections is "priced through the fact that
markets are looking at negative (U.S.) interest rates," ANZ
analyst Daniel Hynes said, adding that the market was expecting
some additional support from the Federal Reserve.
However, "we have (also) had a little bit of a rally in the
U.S. dollar which certainly crimps investor appetite."
Market participants are increasingly becoming anxious about
a second wave of infections as more countries around the world
gradually ease restrictions in an effort to restart their
economies.
The Chinese city of Wuhan, where the pandemic originated,
reported its first new cases since its lockdown was lifted -
raising concerns about a second wave of infections and sending
Asian shares skidding. MKTS/GLOB
China's health authority said the reappearance of local
clusters of virus cases in recent days indicate that
counter-epidemic measures cannot be relaxed yet. Meanwhile, the dollar index .DXY climbed to a more than
two-week high against key rivals on higher safe-haven demand and
bond yields, making gold costlier for investors holding other
currencies. USD/
Fed officials talked down the prospect of negative rates,
after traders in futures tied to the policy rate last week began
pricing in -- for the first time ever -- a small chance of
negative interest rates next year. FEDWATCH
Highlighting strained relationship with China, U.S.
President Donald Trump said he was "not interested" in
re-negotiating the "Phase 1" trade deal after a Chinese
state-run newspaper indicated discontent about it in Beijing.
"The U.S.-China trade issues are back into the picture,"
said Hareesh V, head of commodity research at Geojit Financial
Services.
Japan could end a state of emergency in many regions this
week if new virus infections are under control.
Globally, an estimated $15 trillion worth of stimulus has
already been unleashed to cushion the blow from the pandemic.

Meanwhile, SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, said its holdings fell 0.05%
to 1,081.07 tonnes on Monday. GOL/ETF
Among other precious metals, palladium XPD= slipped 1.5%
to $1,866.07 per ounce and silver XAG= fell 0.4% to $15.48,
while platinum XPT= rose 1.3% to $766.89.

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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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