Gold prices rise as U.S.-China trade tensions intensify

BENGALURU (Reuters) - Gold prices rose early Tuesday, supported by a weaker dollar and a dip in Asian stocks as a trade spat between the United States and China intensified.

FUNDAMENTALS

** Spot gold was up 0.3 percent at $1,281.45 an ounce by 0046 GMT.

** U.S. gold futures for August delivery were also 0.3 percent higher at $1,283.80 per ounce.

** The dollar index , which measures the greenback against a basket of six major currencies, was down 0.2 percent to 94.646. [USD/]

** Asian stocks extended a global downturn on Tuesday, while the safe-haven yen rose as U.S. President Donald Trump threatened new tariffs on Chinese goods in an escalating tit-for-tat trade war between the world's two biggest economies that has rattled financial markets. [MKTS/GLOB]

** Trump threatened on Monday to impose a 10 percent tariff on $200 billion of Chinese goods.

** The United States and South Korea have agreed to suspend a joint military exercise scheduled for August, South Korean and U.S. officials said on Monday, following Trump's pledge to end "war games" after his summit with North Korean leader Kim Jong Un last week.

** The U.S. economy "appears to be in a pretty good place" that should let the Fed continue its steady program of raising interest rates, Atlanta Federal Reserve bank president Raphael Bostic said on Monday, though he feels only one more such increase is needed this year.

** Higher U.S. rates are rattling many emerging markets in much the same way past tightening cycles did, but the Federal Reserve's hawkishness could also bring cheer for a small group of Asian economies that wouldn't mind seeing their currencies weaken.

** Most government bond yields in the euro zone were steady to a touch lower on Monday, capped by the European Central Bank's signalling last week that it will keep interest rates low well beyond the end of its stimulus scheme.

** Syrian state media said on Monday that U.S.-led coalition aircraft had bombed a Syrian army position near the Iraqi border, causing deaths and injuries, but the U.S. military denied it was responsible.

(Reporting by Karen Rodrigues in Bengaluru; editing by Richard Pullin)