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Gold prices rise for the seventh consecutive week as trade war fears boost demand

Gold prices were stable on Friday, and on track for a weekly gain of seven consecutive weeks as President Donald Trump's plan to impose reciprocal duties on all countries that tax U.S. imports fueled fears of a global economic war.

As of 0303 GMT, spot gold remained at $2,929.05 an ounce. Bullion reached a record high of $2,942.70 per ounce on Tuesday.

U.S. Gold Futures increased 0.4% to $2.957.40.

Trump's economics team was tasked on Thursday with developing plans for reciprocal duties against every country that taxes U.S. imports. The targets included China, Japan and South Korea. Ajay Kedia of Mumbai-based Kedia Commodities said that Trump's announcement about reciprocal tariffs was a major catalyst for gold prices in this week. This is because it creates tariff war concerns, and could have an impact on global economies.

Kedia stated that the market was slightly overbought and this could create some technical profits bookings after it nears $3,000 level.

Data on Thursday revealed that the U.S. Producer Price Index (PPI), which tracks the price of goods and services, saw a significant increase in January. This follows the inflation report released Wednesday, in which it was revealed that consumer prices rose at the fastest rate in almost a year-and-a-half.

The PPI data provided more evidence of a new acceleration in inflation and reinforced the view that the Federal Reserve will not reduce interest rates until the second half of the year.

Bullion has traditionally been regarded as a safe asset against inflation and economic unrest, but its appeal is diminishing with the rise in interest rates.

Gold prices have reached record levels globally, and this has dampened sales of jewellery during India's festive season. In China, dealers have offered discounts to lure buyers.

Spot silver increased by 0.4%, to $32.50 an ounce. Palladium was up 0.6% at $999.77 and platinum rose 0.3% to $997.65. All three metals saw a gain for the week (Reporting and editing by Sherry Phillips, Sonia Cheema, and Anushree Mukerjee from Bengaluru)

(source: Reuters)