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PRECIOUS-Gold prices fall as dollar gains vs yuan in escalating trade war
Published at 11/07/2018 at 08:36

* U.S. to impose 10 pct tariffs on $200 bln of Chinese goods

* Spot gold may break support at $1,247/oz - technicals

* SPDR holdings fell 0.22 pct on Tuesday

* Palladium falls to two-week low

(Adds comment and updates prices)

By Karen Rodrigues

BENGALURU, July 11 (Reuters) - Gold prices fell on Wednesday as the dollar firmed against the yuan after the United States threatened to impose additional tariffs on Chinese goods, escalating trade tensions between the world's two largest economies.

The Trump administration raised the stakes in its trade dispute with China, threatening 10 percent tariffs on a list of $200 billion worth of Chinese imports.

The news comes after Washington imposed 25 percent tariffs on $34 billion of Chinese imports last week. Beijing responded immediately with matching tariffs on the same value of U.S. goods exported to China.

Spot gold was 0.3 percent lower at $1,251.43 an ounce at 0710 GMT. In the previous session, the bullion hit a one-week low at $1,246.81 an ounce.

U.S. gold futures for August delivery were 0.3 percent lower at $1,252.30 an ounce.

The offshore Chinese yuan fell as low as 6.6918 per dollar

, down more than 0.5 percent from late U.S. levels and edging near its 11-month low of 6.7344 touched on July 3.

A firmer greenback makes bullion expensive for holders of other currencies as the commodity is priced in dollars.

It's risk-off and that put the dollar on the front foot and triggered commodities lower, a Hong Kong-based trader said.

"With these tariffs, gold has not reacted well as a safe-haven in the past so the metal is under pressure," the trader added.

Spot gold may break a support at $1,247 per ounce and fall more towards the next support at $1,237 as it has completed a bounce from the July 3 low of $1,237.32, Reuters technicals analyst Wang Tao said.

"When trade war risk escalates investors run for cover... I always have gold as a hedge but it's been more challenging to have this view when the U.S. dollar is attracting haven flows," said Stephen Innes, APAC trading head at OANDA.

Meanwhile, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares , fell 0.22 percent to 799.02 tonnes on Tuesday.

Among other precious metals, silver shed 0.8 percent to $15.92 an ounce and platinum was 0.5 percent lower at $837.70 per ounce. Earlier in the session, both the metals fell to their lowest since July 3.

Palladium was down 0.4 percent at $938.03 per ounce, after earlier falling to a two-week low at $934.35.

(Reporting by Karen Rodrigues in Bengaluru; editing by Eric Meijer and Subhranshu Sahu)

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