PRECIOUS-Gold turns positive after hitting two-week lows on trade tensions

* Gold finds strong resistance at $1,200 -ANZ

* Silver hits 2-1/2 year low

* Palladium off multi-week highs hit on Monday (Updates prices, headline; adds comment, second byline, NEW YORK to dateline)

NEW YORK/LONDON, Sept 11 (Reuters) - Gold turned positive on Tuesday as investors bought when it approached $1,200 per ounce. But bullion remained under pressure after hitting a two-week low and the dollar resumed its ascent amid broad risk-off sentiment, looming U.S. interest rate rises and prospects for escalating U.S.-China trade tensions.

Silver also succumbed to the market pressures, hitting a 2-1/2 year low.

Investors began purchasing more gold as it crept toward the psychologically-important $1,200 level, said Phil Streible, senior commodities strategist at RJO Futures in Chicago.

“Some investors see below $1,200 as a small window to buy, because historically we haven’t seen gold remain below $1,200 since late December 2016, even though I think it’s going to go down to match those previous lows,” he said.

Spot gold gained 0.2 percent at $1,197.28 per ounce by 1:49 p.m. EDT (1749 GMT). U.S. gold futures for December delivery settled up $2.40, or 0.2 percent, at $1,202.20 per ounce.

“Higher real yields are stimulating the dollar, but gold is pretty subdued, which to me, means there’s a little bit of balance,” said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management.

The dollar edged up versus a basket of major currencies. Later in trade, the greenback backed off its earlier highs, which helped push gold higher.

Since its April peak gold has dropped more than 10 percent as a trade war between China and the U.S. has driven investors to seek safety in the dollar rather than in gold, a traditional safe haven.

Bearish bets on Comex gold have risen to record levels while investors have liquidated exchange-traded gold fund holdings.

Broadly underpinning the greenback were Friday’s comments from U.S. President Donald Trump that he was ready to impose tariffs on virtually all Chinese imports to the United States and strong U.S. jobs data.

The jobs data last week cemented expectations that the Federal Reserve will raise U.S. interest rates in September.

Higher interest rates increase bond yields, making non-yielding bullion less attractive. They also tend to boost the dollar, making dollar-priced gold costlier for non-U.S. investors.

Gold is finding strong resistance at $1,200, with investors selling into any rallies that threaten to push it above that level, ANZ analysts said in a research note.

Silver fell 0.4 percent at $14.10 per ounce, having hit its lowest since January 2016 at $13.90.

Platinum gained 0.6 percent at $786.99 per ounce, while palladium lost 0.4 percent at $971.49 after hitting its highest in nearly 12 weeks at $991.15 on Monday. (Additional reporting by Nallur Sethuraman in Bengaluru Editing by David Goodman and Kirsten Donovan)