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Gold rises more than 1 percent on renewed U.S.-China trade tensions

Gold bars are seen at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, March 18, 2016. REUTERS/Leonhard Foeger/File Photo (Reuters)

By Renita D. Young and Zandi Shabalala

NEW YORK/LONDON (Reuters) - Gold prices rose more than 1 percent on Monday as the U.S. dollar softened and China raised tariffs on U.S. products, escalating global trade tensions.

China imposed extra tariffs of up to 25 percent on 128 U.S. products including frozen pork and wine in response to U.S. duties on imports of aluminum and steel.

With many major European financial centers closed for Easter Monday, spot gold added 1.4 percent at $1,342.46 per ounce by 1:34 p.m. EDT (1734 GMT), earlier reaching a $1,342.97 session high. It recorded its third straight quarter of gains on Friday.

U.S. gold futures for June delivery settled up $19.60, or 1.5 percent, at $1,346.90 per ounce.

"Increased geopolitical tension highlighted by China and their retaliation and where this could end up is supporting gold today," said Jeff Klearman, portfolio manager at GraniteShares.

Gold is often used as a store of value during times of financial or political uncertainty.

"Last week we saw GDP revised up 2.9 percent (versus expected 2.7 percent) which can be another indicator that U.S. and global growth is doing well. Combine that with a trade war and you could have inflation concerns supporting gold," Klearman added.

A weaker dollar generally boosts the price of gold. The U.S. dollar index, eased against a basket of six other major currencies.

"A sizeable net long position in gold is also helping prop things up," said Joshua Graves, senior commodity strategist at RJO Futures in Chicago.

Gold speculators raised their net long position by 50,996 contracts to 172,834 contracts in the week to March 27, U.S. Commodity Futures Trading Commission data showed on Friday.

Gold fell 1.7 percent last week in its biggest such drop since early December. But it climbed 1.7 percent in January-March, posting its third straight quarterly gain.

"Look for gold to break above the $1,337 level for further momentum. Support appears around the $1,325 area. It is difficult not to be bullish in the current panorama," said Kitco Metals' Global Trading Director, Peter Hug.

In other precious metals, spot silver climbed 2.1 percent to $16.66 per ounce.

Platinum rose 0.6 percent at $933.60 per ounce, having fallen to its lowest since Dec. 29 in the previous session.

"The global platinum market showed a substantial supply surplus in 2017 and is also likely to remain oversupplied in 2018," said Commerzbank, adding there was therefore little potential for platinum to recover.

Palladium lost 1.8 percent at $934.10 an ounce after dropping to $928, its lowest since Oct. 10.

(Additional reporting by Swati Verma in Bengaluru; Editing by John Stonestreet and Tom Brown)