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PRECIOUS-Gold scales 6-year peak on trade jitters, eyes $1,500

K. Sathya Narayanan

* SPDR Gold holdings rise to highest in over a year

* Silver jumps to more than one-year high

* 10-year U.S. Treasuries yield near 3-year low (Adds comments, updates prices)

Aug 7 (Reuters) - Gold scaled a six-year peak on Wednesday to within striking distance of $1,500 as investors continued to pile into safe havens to hedge against heightened U.S.-China trade tensions.

Spot gold was up 0.9% at $1,487.28 per ounce at 0955 GMT. It rose as much as 1.1% to $1,490.84 earlier, its highest since April 2013.

U.S. gold futures climbed 1% to $1,499.10, after briefly surpassing the $1,500 level for the first time in more than six years.

The world's two-largest economies have been locked in a bitter trade tussle for over an year now, which rapidly escalated last week when U.S. President Donald Trump said he would impose additional tariffs on Chinese goods.

On Monday, China responded by allowing its currency to weaken past the key 7 per dollar mark, prompting Washington to label Beijing a currency manipulator.

"The escalation in trade tension is the key backdrop supporting gold prices and the other crucial factor is the massive increase in negative yielding debt," said Capital Economics analyst Ross Strachan.

While there is potential for a short-term correction, many market participants are looking to $1,500 as a key pivot, Strachan added.

The 10-year U.S. Treasury yields fell to their lowest since 2016.

On Tuesday, euro zone government bond yields slumped to record lows, while Dutch 30-year and Irish 10-year yields turned negative for the first time on Monday.

Wall Street bank Goldman Sachs said it no longer expects a trade deal to be struck before the 2020 U.S. presidential election, and Morgan Stanley warned that more tit-for-tat tariffs could tip the world economy into recession by the middle of next year. However, White House economic adviser Larry Kudlow said the Trump administration wanted to continue talks with China and still planned to host a Chinese delegation for talks in September, which offered some respite to global stock markets.

"Gold is quite clearly still in demand as a safe haven in the current market environment, as reflected among other things in continuing ETF inflows. The market has now priced in three further rate cuts (by the U.S. Federal Reserve) this year," Commerzbank analyst Daniel Briesemann said in a note.

A Fed official said it was appropriate to "wait and see" how the upcoming data was, before deciding whether rates should be cut again in September.

Meanwhile, holdings of the largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, rose to 26.9 million ounces on Tuesday, their highest since end-May 2018.

Silver gained 1.9% to $16.76 per ounce, after touching its highest since June 2018. Platinum gained 0.5% to $851.79 an ounce, while palladium slipped 0.2% to $1,434.11. (Reporting by K. Sathya Narayanan in Bengaluru; editing by David Evans)