July 26, 2018 / 4:24 AM / 21 days ago

PRECIOUS-Gold prices edge lower as dollar gains vs yuan

    * Early in the trade, gold hit its highest since July 17
    * Spot gold to rise into $1,246-$1,258/oz range - technicals
    * SPDR gold holding dropped 0.29 pct on Wednesday

 (Recasts, adds comment, details and updates prices)
    By Karen Rodrigues
    BENGALURU, July 26 (Reuters) - Gold prices shed early gains
on Thursday, as the U.S. dollar stood tall against the Chinese
yuan amid a grim outlook for the world's second-largest economy.
    Spot gold        was down 0.3 percent at $1,227.61 an ounce,
as of 0755 GMT. Earlier in the session, the yellow metal hit
$1,235.16, its highest in more than a week, underpinned by
positive U.S.-EU trade negotiation talks.             
    U.S. gold futures         for August delivery were 0.3
percent lower at $1,227.70 an ounce. 
    "The dollar is stronger against the CNH (Chinese yuan traded
offshore) and therefore gold is weaker," a Hong Kong-based
trader said.
    The offshore Chinese yuan dropped 0.6 percent to 6.7910
dollar. A heated Sino-U.S. trade dispute, signs of a slowdown in
the economy and moves by Beijing to loosen monetary conditions
have all conspired to dent the yuan's outlook.                 
    "The U.S.-China trade dispute, though, still remains
unresolved and is the more challenging one. On gold, it is
likely to ebb and flow with U.S. dollar movements, before
gaining momentum towards the end of the year," said John Sharma,
economist, National Australia Bank.
    Meanwhile, Asian shares inched up as the United States and
Europe agreed to negotiations to ease barriers on trade, but
weakness in China markets underscored persistent worries about
the outlook for global growth.            
    Investors are also watching out for the European Central
Banks' (ECB) policy meeting, which is due later in the day and
the second-quarter U.S. economic growth data, which is expected
on Friday. 
    The ECB is all but certain to keep policy on hold on
Thursday, arguing that the risks from an amplifying global trade
conflict don't warrant a deviation from its plan to gently exit
its easy-money policy of the last few years.             
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund fell 0.29 percent to 800.20
tonnes on Wednesday.          
    However, Reuters technical analyst Wang Tao said, spot gold
may break a resistance at $1,237 per ounce and rise into a range
of $1,246-$1,258.         
    Among other precious metals, silver        edged 0.4 percent
lower to $15.50 an ounce, after earlier hitting its highest
since July 17 at $15.67 an ounce.
    Palladium        dropped 0.5 percent to $934.50 an ounce. It
touched an over one-week high at $941.10 in the previous
session. 
    Platinum       was down 0.5 percent at $836.10 an ounce.

 (Reporting by Karen Rodrigues in Bengaluru, 
Editing by Joseph Radford and Sherry Jacob-Phillips)
  
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