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Gold prices held firm on Friday, drawing support from increased trade tensions after US President Donald Trump's tariff increase on $200 billion worth of Chinese goods took effect, putting the bullion on track for a weekly gain. Spot gold was steady at $1,284 per ounce at 0705 GMT and is up about 0.4% for the week. US gold futures were also firm at $1,285 an ounce.

US President Donald Trump's tariff increase to 25 percent on $200 billion worth of Chinese goods took effect on Friday, and Beijing said it would strike back, ratcheting up tensions as the two sides pursue last-ditch talks to try salvaging a trade deal. Top US and Chinese trade negotiators concluded the first of two days of talks on Thursday to rescue a trade deal that is close to collapsing as Washington goes ahead with plans to hike tariffs on hundreds of billions of dollars of goods imported from China.

"There is still some level of uncertainty surrounding the US-China trade deal, and when gold tends to go down there seems to be opportunistic buying," said John Sharma, economist at National Australian Bank. The metal had fallen to its lowest since the end of December late last week, but has since risen nearly 1.4%.

However, climbs in gold have been somewhat muted despite broad risk-aversion in the market, with other safe havens such as the yen and Swiss Franc gaining. Gold was also facing a barrier around $1,290 levels, restricting buying from traders who follow technical charts, analysts said.

"Support (for gold) remains evident around $1,280, while $1,290-$1,295 sees resistance. The yellow metal is continuing to see interest around $1,280 levels," MKS PAMP Group said in a report, adding that bullion also found plenty of sellers around $1,286 during the Asian session. Spot gold is targeting a range of $1,267-$1,274 as it failed to break resistance at $1,291 per ounce, according to Reuters technical analyst Wang Tao.

Copyright Reuters, 2019

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