LONDON: Gold hit a one-week high on Wednesday as the dollar dipped versus the yen and share markets faltered after China retaliated in kind to a US move to slap tariffs on $50 billion worth of its imports, raising trade war jitters.
Beijing said after Chinese markets had closed that it would impose additional tariffs on $50 billion worth of US imports ranging from cars, chemicals and corn to whisky and tobacco.
The dent in risk appetite sucked some strength out of the dollar, making dollar-priced gold cheaper for non-US investors and increasing the appeal of gold as a safe haven asset in times of geopolitical or economic turmoil.
But capping gold's upside were signs of still steady global economic growth, with a host of manufacturing survey's (PMIs) in many regions showing some slowing, but from lofty levels.
"Political (trade war) factors are offsetting the negative factors (for gold) of a generally improving US and global economy. We think gold is heading upwards largely because we have a weaker dollar view, but we think the range is going to hold for a while," said Matthew Turner, commodities strategist at Macquarie.
Spot gold was up 0.7 percent at $1,341.32 per ounce as of 1426 GMT, having touched 1,348.06, its highest in just over a week.
US gold futures rose 0.6 percent at $1,345.20 an ounce.
Investors are looking ahead to US non-farm payrolls on Friday, with stronger-than-expected data a risk for gold as it will likely support the dollar and calm fears over growth, even in the face of a potential trade war.
"It seems that investors are not panicking as much as they were, aware that these (trade war moves) are opening gambits that will ultimately need to be negotiated quietly and away from the headlines," said INTL FCStone analyst Edward Meir.
"We assume that between now and the time that the tariffs take effect, both sides will be hard at work in order to gain concessions from one another and thus avoid having to impose tariffs."
In other precious metals, spot silver fell 0.1 percent to $16.40 per ounce, after shedding 1.4 percent on Tuesday.
Platinum was down 0.8 percent at $916.70 an ounce, after falling to as low as $910, its lowest since December.
Palladium was down 1 percent at $920.20 an ounce after touching $913, its lowest since October.
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