* Speculators raise net gold shorts in week to Aug. 14
* SPDR Gold holdings decline 0.2 pct on Friday
* Drop in gold prices props up physical buying in Asia
* Spot gold may gain more into $1,194-$1,206/oz - technicals (Adds analyst comment, updates prices)
BENGALURU, Aug 20 (Reuters) - Gold edged higher on Monday as investors found the metal attractive after prices fell to a 19-month low last week, while a rising dollar weighed on the market ahead of planned U.S.-China trade talks.
The precious metal shed 2.2 percent last week in its sixth straight weekly decline and worst weekly performance since December.
“Though the metal looks attractive at these levels, limited upside potential remains as a primary impediment,” said Benjamin Lu, a commodities analyst at Phillip Futures.
Spot gold was up 0.2 percent at $1,186.33 an ounce as of 0655 GMT, after touching its lowest since January 2017 at $1,159.96 on Thursday. U.S. gold futures were up 0.7 percent at $1,191.60 an ounce.
“Gold prices will remain highly susceptible to dollar strength in the near term,” Lu said.
Gold has recently lost its appeal as a safe haven amid a Turkish currency crisis and trade disputes, as investors preferred the U.S. dollar.
The metal has declined over 13 percent from its April high on rising U.S. interest rates and a soaring dollar.
But the dollar’s advance has slowed ahead of lower-level trade talks between Chinese and U.S. officials in Washington amid reports that the world’s top two economies may meet on Aug. 21 and 22.
The dollar index against a basket of six currencies was up 0.2 percent on Monday, after hitting its highest since June 2017 last week and posting its worst decline in nearly a month on Friday.
Meanwhile, hedge funds and money managers increased their net short position in COMEX gold contracts for a sixth straight week to a record in the week to Aug. 14, data showed on Friday.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 0.15 percent to 772.24 tonnes on Friday from Thursday.
Record short positions and liquidations in ETFs indicate that gold is due for a turnaround, according to some analysts and investors.
Also, spot gold’s 14-day relative strength index was at 32.523, after touching 21.187 last week. A reading below 30 indicates the commodity is oversold and could herald a price correction.
“Value-buying in this oversold territory is highly likely to underpin gold prices,” said Sugandha Sachdeva, vice president of metals, energy and currency research at Religare Securities Ltd.
Physical gold demand in second largest consumer India regained momentum last week, with lower prices attracting fresh buying in other major Asian hubs as well.
Spot silver climbed 0.1 percent to $14.77 an ounce.
Platinum rose 1 percent to $789.30, while palladium remained steady at $910.25. (Reporting by Nallur Sethuraman in Bengaluru Editing by Sai Sachin Ravikumar and Subhranshu Sahu)