PRECIOUS-Gold lower as dollar steadies in higher U.S. rates environment

    * Dollar perched at 11-month high 
    * Platinum hits its lowest in 2-1/2 years on trade tensions

 (Recasts; updates prices, headline; adds comment, byline, NEW
YORK to dateline)
    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, June 20 (Reuters) - Gold prices dropped,
remaining near a six-month low on Wednesday as the U.S. dollar
hovered around 11 month peaks but was offset by festering global
trade tensions, while platinum hit a 2-1/2-year trough.
    Rising U.S. interest rates also pressured bullion.
    Spot gold        lost 0.2 percent at $1,272.44 by 1:36 p.m.
EDT (1736 GMT). U.S. gold futures         for August delivery
settled down $4.10, or 0.3 percent, at $1,274.50 per ounce. 
    Trade tensions between the United States and China are
showing no signs of easing. On Tuesday, a White House trade
adviser said Beijing had underestimated the U.S. president's
resolve to impose more tariffs.             
    That followed Washington threatening to impose tariffs on
$200 billion of Chinese goods and Beijing saying it was raising
tariffs on $50 billion of U.S. goods.             
    Gold, seen as a safe haven asset, usually gains from
geopolitical or economic tensions, but has struggled this time
around because the dollar has risen strongly, making
dollar-priced gold costlier for non-U.S. investors. 
    "This environment we've had with interest higher rates and a
higher U.S. dollar has kind of halted the rise of gold at least
for the short term," said Will Rhind, CEO of GraniteShares.
    Higher U.S. interest rates make gold a less attractive
investment since it does not bear interest.
    However, "the reason it hasn't fallen as much as you'd
expect is that safe-haven demand has sustained the price," said
Capital Economics analyst Simona Gambarini.
    The U.S. dollar was little changed, hovering near an
11-month peak against a basket of major currencies as China's
signal of a tolerance of a stronger yuan offset anxiety about
the global trade conflict.
    World markets recovered from a recent selloff on the trade
tensions, while Treasury yields rose after the Federal Reserve
chairman said the U.S. central bank should continue with a
gradual pace of interest rate increases.            
    Fed Chairman Jerome Powell said the pace should stay the
same given that the labor market does not seem to be overly
    Platinum        increased 0.7 percent at $873.20 an ounce.
Earlier in the session, it touched $854.50, its lowest since
Feb. 3, 2016.
    Silver        gained 0.3 percent at $16.31 an ounce.
    Palladium        lost 0.1 percent at $965.60 per ounce,
having hit a one-month low of $960.25.

 (Reporting by Renita Young and Maytaal Angel, Additional
reporting by Karen Rodrigues; editing by Louise Heavens and
Rosalba O'Brien)