PRECIOUS-Gold gains after drifting near $1,200 as dollar drops versus yuan
Mining News Pro - * China bounce pushes world shares to six-month highs * Investors set aside global feuds such as Iran sanctions (Updates prices) By Maytaal Angel LONDON, Aug 7 (Reuters) - Gold climbed nearly 1 percent on Tuesday, having drifted near $1,200 an ounce this week, as the dollar fell versus the yuan while investors focussed on strong corporate earnings rather than China-U.S. trade tensions. "At the moment gold is more sensitive to the yuan than the dollar (index), so if the dollar is rallying but not against the yuan, gold is stable. The correlation (with the yuan) is almost one on one," ABN Amro commodities strategist Georgette Boele said. Chinese shares jumped the most in more than two years on investor hopes of fresh government spending and amid a pause in trade tensions, while the dollar slid versus the yuan and a currency basket.

A weak dollar makes dollar-priced gold cheaper for non-U.S. investors. "We should start bottoming out around $1,200 because we don`t expect a sell-off in the yuan from these levels. We think the authorities will (act to) stabilise it," Boele said. Spot gold was up 0.4 percent at $1,211.37 an ounce at 1422 GMT, while U.S. gold futures were up 0.1 percent
at $1,219.10 an ounce. Gold has dropped nearly 12 percent since mid-April, largely failing to benefit from trade tensions that have directed safety flows into the dollar away from other traditional safe havens such as gold. World shares edged towards a six-month high amid the rally in Chinese stocks and as European oil and mining stocks picked up after the United States moved to reimpose some sanctions on Iran. The sanctions include precious metals, U.S. banknotes, steel and coal.

"We believe a reversal in gold prices is in the offing, as speculation of a trade war and Iranian sanctions are turning into reality. Further, record short investors positions in gold strengthen our conviction of a price recovery in H2," ANZ analysts said in a note. U.S. data from last week showed investors added 13,931 contracts to their net short position in the week to July 31, bringing it to 41,087 contracts, the biggest since records became publicly available in 2006. Silver rose 0.7 percent to $15.36 an ounce. Platinum gained 1 percent to $825.99 per ounce, while palladium was 0.9 percent higher at $912.10 an ounce. (Additional reporting by Apeksha Nair in Bengaluru; Editing by Dale Hudson and Emelia Sithole-Matarise)  

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