Gold edges up as dollar softens versus yuan

By Apeksha Nair

BENGALURU (Reuters) - Gold prices drifted higher in Asian trade on Wednesday, extending gains into a second session, as the U.S. dollar softened against China's yuan and the euro.

Spot gold rose 0.2 percent to $1,213.02 an ounce at 0640 GMT, after rising 0.4 percent in the previous session.

U.S. gold futures were also up 0.2 pct at $1,220.80 per ounce.

"The dollar-CNH is a bit under pressure this morning and we're seeing some buying on the back of that," a Hong Kong-based trader said.

China's yuan held firm near a one-week high versus the dollar on Wednesday, following firmer equities, extending its rise after the central bank last week took steps to curb the currency's decline.

Against a basket of currencies, the dollar eased 0.1 percent as its recent rally on concerns over escalating trade tensions showed signs of fading.

A weaker dollar makes greenback-denominated gold cheaper for holders of other currencies.

"Gold is consolidating here for the moment. The dips on the dollar still seem to be bought so I am sceptical to call a bottom on gold," the trader said.

Signals are mixed for spot gold, as it seems to be stuck in a neutral range of $1,206-$1,220 per ounce, according to Reuters technicals analyst Wang Tao.

Meanwhile, Asian shares rose on Wednesday on the back of firmer Wall Street earnings while expectations for increased Chinese stimulus helped take the edge off wider concerns about the worsening Sino-U.S. trade dispute.

The United States will begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23, the U.S. Trade Representative's office said on Tuesday as it published a final tariff list targeting 279 imported product lines.

The European Parliament has agreed to ease tough new liquidity rules for banks trading gold, marking a success for the London Bullion Market Association's (LBMA) campaign to revise the plans.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.15 percent to the lowest since August 2017 at 25,319,951.65 ounces on Tuesday.

Gold-backed exchange-traded funds (ETFs) saw outflows in North America, Europe and Asia in July as a strong U.S. dollar helped weaken gold prices, the World Gold Council said on Tuesday.

Among other precious metals, silver rose 0.5 percent at $15.40 an ounce. Platinum was up 0.2 percent at $827.30 per ounce, while palladium fell 0.3 percent to $903.22.

(Reporting by Apeksha Nair in Bengaluru; Editing by Gopakumar Warrier and Sunil Nair)