PRECIOUS-Gold scales over 6-year peak on heightened trade, economic risks

* Silver hits nearly two-year high
* Stocks recover slightly on U.S.-China trade renegotiation
hopes

(Updates prices)
By Karthika Suresh Namboothiri and Asha Sistla
Aug 26 (Reuters) - Gold surged to a more than six-year peak
on Monday, surpassing $1,550 in early trade, as investors sought
safety from a host of uncertainties including heightened
U.S.-China trade tensions and a fragile global economy.
Spot gold XAU= rose 0.3% to $1,529.90 per ounce as of
02:30 pm EDT (1830 GMT), paring gains to shed more than $20 from
earlier in the session when the metal had jumped to its highest
level since April 2013 at $1,554.56.
U.S. gold futures GCcv1 settled nearly unchanged at
$1,537.20 per ounce.
Meanwhile, gold in euro XAUEUR= and Australian dollar
XAUAUD= hit record levels.
"There's a great deal of uncertainty and instability in the
global financial markets and economies. And in that kind of
environment, investors are bouncing around so they are buying in
to gold and buying out of gold," said Jeffrey Christian,
managing partner of CPM Group.
Washington announced last week an additional 5% duty on $550
billion in targeted Chinese goods, hours after China unveiled
retaliatory tariffs on $75 billion worth of U.S. products.
Typically, gold is used as a place to park assets
during times of global uncertainty.
The long drawn-out trade war between the world's two largest
economies has roiled markets since it began more than a year
ago, triggering fears of a global slowdown.
Stock markets, however, recovered from lows after U.S.
President Donald Trump, speaking on the sidelines of the G7
summit of world leaders in France, said Chinese officials had
contacted U.S. trade counterparts overnight and offered to
return to the negotiating table. "Gold prices could fall $100 very quickly if there were a
resolution not only to the trade war but to other problems that
are out there," Christian said.
Data showed a modest rise in new orders for key U.S.-made
capital goods in July while shipments fell by the most in nearly
three years, pointing to continued weakness in business
investment in the third quarter. While monetary policy easing by central banks would be
supportive for gold, "the single biggest risk to the recent gold
rally would be central bank success, potentially aided by fiscal
stimulus or a détente in the trade dispute," a BofA Merrill
Lynch Global Research note stated.
"Central Bank policy working out may in all likelihood
provide a relatively more benign volatility environment, which
in turn would challenge the current gold bull run."
Federal Reserve Chair Jerome Powell said on Friday the U.S.
central bank will "act as appropriate" to keep the economy
healthy. In other precious metals, silver XAG= gained 1.6% at
$17.67, platinum XPT= remained unchanged at $853.40 and
palladium XPD= rose 0.8% to $1,471.70.
Silver touched $17.77 an ounce earlier in the session, its
highest level since September 2017.