Gold gains as Hong Kong unrest stirs risk aversion

Spot gold was up 0.2% at $1,711.35 per ounce, as of 1250 GMT

  
Image used for illustrative purpose. Gold bars are seen in the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, December 15, 2017.

Image used for illustrative purpose. Gold bars are seen in the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, December 15, 2017.

REUTERS/Leonhard Foeger

Gold prices rose on Thursday as tensions between the United States and China over a Hong Kong security law escalated, while fresh stimulus measures by several economies to mitigate the coronavirus fallout also lent support.

FUNDAMENTALS

* Spot gold was up 0.2% at $1,711.35 per ounce, as of 1250 GMT, after touching a two-week low on Wednesday. U.S. gold futures GCv1 fell 0.2% to $1,723.60.

* U.S. Secretary of State Mike Pompeo said Hong Kong no longer qualifies for its special status under the U.S. law, dealing a blow to its status as a financial hub. 

* U.S. President Donald Trump has a long list of possible responses to China's plans to impose a national security law on Hong Kong, including visa and economic sanctions, said David Stilwell, assistant Secretary of State for East Asia. 

* The European Union unveiled a 750 billion euro ($826.13 billion) plan on Wednesday to prop up economies, lifting the demand for safe-haven assets such as gold. 

* Stimulus measures to limit the economic damage have supported gold, which is often considered a hedge against inflation and currency debasement.

* Japan approved a fresh $1.1 trillion stimulus package; while sources said India may need to pump nearly $20 billon into its state banks. 

* A Federal Reserve report on Wednesday implied that U.S. businesses continued to be hammered into the middle of May. 

* SPDR Gold Trust GLD holdings, the world's largest gold-backed exchange-traded fund, rose 0.2% to 1,119.05 tonnes on Wednesday. 

* Palladium rose 0.2% to $1,938.76 per ounce and platinum gained 1.9% to $834.19, while silver fell 0.4% to $17.24.

DATA/EVENTS (GMT) 0900 EU Consumer Confid. Final May 1200 Germany CPI Prelim YY May 1230 US GDP 2nd Estimate Q1 1230 US Initial Jobless Claims Weekly

($1 = 0.9079 euros)

(Reporting by Harshith Aranya in Bengaluru, Editing by Sherry Jacob-Phillips) ((harshith.aranya@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 80 6182 2599; Reuters Messaging: harshith.aranya.thomsonreuters.com@reuters.net))

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