PRECIOUS-Gold flat as Sino-U.S. tension offsets economic recovery hopes

* U.S. consumer confidence data due at 1400 GMT
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(Recasts with updated prices)
By Harshith Aranya
May 26 (Reuters) - Gold was little changed on Tuesday as
brewing U.S.-China tension over Hong Kong offset pressure from
the easing of coronavirus-induced curbs and gains in stock
markets.
Spot gold XAU= was steady at $1,728.71 per ounce by 0738
GMT. U.S. gold futures GCv1 fell 0.5% to $1,727.30.
"The key supportive factor for the (gold) market is rising
tensions between China and the U.S., and if we see a further
escalation, we would see another move higher in gold," said ING
analyst Warren Patterson.
China's foreign ministry office in Hong Kong and the city's
security chief defended proposed security laws by describing
some acts in mass pro-democracy protests last year as terrorism.
The proposed legislation could lead to U.S. sanctions on
Hong Kong and China, and threaten the city's status as a
financial hub, White House National Security Adviser Robert
O'Brien said on Sunday. Gold is seen as a safe-haven asset during political and
economic uncertainties.
One of the factors keeping a cap on gold prices is the
easing of lockdown restrictions, said Patterson, adding that,
"people are getting more positive on recovery."
Asian shares forged ahead while U.S. stock futures breached
a major chart barrier as investors brushed past Sino-U.S. trade
tensions to more stimulus in China and a re-opening world
economy. MKTS/GLOB
Helping risk-on sentiment, a survey showed on Monday that
German business morale rebounded in May, recovering from its
most dramatic fall on record the previous month. "As long as (gold) holds above $1,700, the bias is clearly
positive," said Harshal Barot, research consultant for South
Asia at Metals Focus.
Investors are also awaiting the U.S. consumer confidence
data due at 1400 GMT.
Among other precious metals, palladium XPD= gained 0.9% to
$2,009.18 per ounce and silver XAG= rose 0.9% to $17.35, while
platinum XPT= slipped 0.3% to $835.71.