May 10, 2019 / 1:29 PM / a year ago

PRECIOUS-Gold holds gains as U.S. hikes tariff on Chinese goods

* Bullion up about 0.6% so far this week

* Palladium gains after sharp decline on Thursday

* Silver on course for 2nd straight weekly fall

* Platinum on track for 3rd consecutive week of declines (Updates prices, adds details)

By Brijesh Patel

May 10 (Reuters) - Gold edged higher on Friday and was heading for a weekly gain, supported by trade concerns after the United States hiked tariffs on Chinese goods during trade talks between the two countries.

Spot gold was up 0.2% at $1,286.40 per ounce at 1305 GMT, and is up about 0.6% this week.

U.S. gold futures were up 0.2% at $1,287.20 an ounce.

"Tensions in the Middle East and also the trade disputes between the United States and China are supporting gold at the moment," said Afshin Nabavi, senior vice president at MKS SA.

"But the market continues to be rangebound around $1,275 on the downside and around $1,292 on the upside. We have been having quite a bit of resistance around the $1,290 level," he added.

The United States escalated a tariff war with China on Friday by hiking levies to 25% for $200 billion worth of Chinese goods, and Beijing said it would strike back.

The tariff hike came in the middle of two days of talks between top U.S. and Chinese negotiators.

Adding to global anxiety, U.S. bombers arrived at a U.S. base in Qatar. The bombers have been sent to the Middle East to counter what Washington describes as threats from Iran.

Bullion was also supported by a weaker dollar which fell after data showed a lower than expected rise in the U.S. consumer price index last month.

However, world stocks rose on Friday, but were still set for the worst weekly performance since late December 2018 due to an escalation in the U.S.-China trade dispute.

"Stock markets are rebounding despite Donald Trump's tariffs on $200 billion worth of Chinese imports, confirming that investors are still trying to keep alive the bullish sentiment," Carlo Alberto De Casa, chief analyst with ActivTrades, wrote in a note.

"In this scenario, gold is, once again, close to the first resistance area, placed at $1,288. A clear and solid return above $1,290 would also denote the break-out of the bearish trendline that has marked the last few months."

Meanwhile, palladium rose 1.4% to $1,311.15 per ounce, having dropped as much as 4% in the previous session to its lowest since Jan. 4 at $1,263.85.

"The price slide temporarily made palladium cheaper than gold again for the first time since the start of the year," Commerzbank analysts said in a note.

"Technical selling could push the price down even further, given the increasingly gloomy technical picture."

Silver was up 0.1% at $14.77 per ounce, while platinum rose 1.4% to $855.53.

Silver is on course to register a second straight week of declines, while platinum looks set for a third weekly drop in a row. (Reporting by Brijesh Patel and Harshith Aranya in Bengaluru; Editing by Edmund Blair and Mark Potter)

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