Gold holds gains near 9-year peak on U.S.-China tensions and stimulus bets

Gold prices rallied to its highest in nearly 9-years, driven by an escalation in U.S.-China tensions and expectation of more stimulus measures to support pandemic-hit economies.

Spot gold was trading 0.5 percent higher at $1,882.13 per ounce by 0919 GMT, having hit a high of $1,888.80 earlier, its highest since September 2011. U.S. gold futures rose 0.8 percent to $1,880.85.

U.S.-China tensions heightened after Washington gave Beijing until Friday to close its consulate in Houston amid accusations of spying and President Donald Trump said it was always possible other Chinese missions could be ordered to close as well.

China has vowed to respond, and the escalation in tension between both the economies helped the greenback find support.

Coronavirus cases continued to rise in the United States, while more than 15.01 million people have been infected by the virus globally. California officially became the worst-hit state, surpassing New York, with more than 414,000 cases of COVID-19.

The European Union's agreed on a 750 billion-euro recovery fund to share the debts incurred during the coronavirus crisis. Hopes for another round of U.S. stimulus measures also boosted the safe-haven metal.

The greenback against a basket of currencies traded 0.1 percent down at 94.86, having touched a low of 94.78 earlier, its lowest since March 9. The U.S. Treasury yields edged lower, with the benchmark 10-year note yield trading at 0.593 percent.

Investors now await U.S. weekly jobless claims due later in the day that will offer fresh clues on economic progress.