PRECIOUS-Gold pares gains as equities firm; U.S.-China rift lends support

* U.S. jobless claims total 2.123 million for week ended May
23
* SPDR gold holdings at seven-year peak
* For an interactive graphic tracking the global coronavirus
spread, open https://tmsnrt.rs/3aIRuz7 in an external browser

(New throughout, updates prices, market activity and comments)
By Eileen Soreng
May 28 (Reuters) - Gold pared gains on Thursday, having
risen 1% earlier in the session, pressured by an advance in Wall
Street, but escalating tensions between the United States and
China kept the bullion supported.
Spot gold XAU= rose 0.2% to $1,712.35 per ounce by 2:21
p.m. EDT (1821 GMT).
U.S. gold futures GCv1 settled up 0.1% at $1,728.30.
"U.S. equities have got an underlying bid throughout the
entire day," said Phil Streible, chief market strategist at Blue
Line Futures in Chicago, adding many investors were liquidating
their gold positions for fear of missing out on the equity
trade.
Wall Street's major indices rose, boosted by gains in
healthcare and technology stocks. .N
Gold prices were, however, supported by fresh signs of the
economic blow from the coronavirus, as well as brewing
U.S.-China tensions with the Trump administration looking at
options to punish China over its tightening grip on Hong Kong.
"We're seeing tensions increase between U.S. and China... We
see the market froth still with this bevy of negative economic
data and that's clearly supportive for the gold market," said
David Meger, director of metals trading at High Ridge Futures.
The latest U.S. unemployment benefits data held above 2
million last week for a 10th straight week, signaling a deeper
economic hit from the pandemic. "We've tested the $1,700 and bounced back, so if we look
forward the market continues to expect more stimulus from the
Federal Reserve and other central banks," said Bart Melek, head
of commodity strategies at TD Securities.
Large stimulus measures tend to support gold, which is often
considered a hedge against inflation and currency debasement.
Holdings in the SPDR Gold Trust GLD exchange-traded rose
to a seven-year high of 1,119.05 tonnes on Wednesday. GOL/ETF
Elsewhere, palladium XPD= rose 0.5% to $1,945.63 per
ounce, platinum XPT= gained 2% to $835.54 and silver XAG=
eased 0.1% higher at $17.29.