* $1,200 acting as strong technical resistance for gold
* Spot gold seen testing support at $1,188/oz -technicals
* Silver flat after hitting over 2-1/2 year low on Tuesday (Recasts, adds comment)
By Sethuraman N R
BENGALURU, Sept 12 (Reuters) - SendGold prices edged down on Wednesday as the yuan weakened amid fears the Sino-U.S. trade war could escalate, making the metal more expensive for buyers from the world’s No.2 economy.
Bullion also faced strong technical resistance after it failed to break above the key $1,200 per ounce level on Tuesday.
Spot gold was down 0.3 percent at $1,194.41 an ounce at 0650 GMT, after hitting its lowest since Aug. 24 at $1,187.21 on Tuesday.
U.S. gold futures were down 0.3 percent at $1,198.90 an ounce.
“There is some selling pressure on the renminbi, which is affecting gold,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
“Also, people are reluctant to buy as $1,200 is acting as strong resistance after failing to break through the level last night.”
The trade conflict between Washington and Beijing has prompted investors to buy the U.S. dollar in the belief that the United States has less to lose from the dispute.
Gold has been stuck in a $20 price range over the past two weeks, with investors looking for technical breakouts for clues on further movements.
“It seems the sideways price action will persist ahead of the Federal Reserve interest rate decision,” said David Song, a currency analyst at DailyFX, adding that a hawkish rate-hike from the Fed would likely reinforce a long-term bearish outlook for gold.
The U.S. central bank is widely expected to raise benchmark interest rates at its September meeting and expectations are growing for one more hike in December on the back of positive economic data.
Higher rates increase bond yields, making non-yielding bullion less attractive, and tend to boost the dollar.
The dollar index was steady at 95.271 on Wednesday.
Gold has fallen over 12 percent from a peak in April, pressured by rising U.S. interest rates amid intensifying global trade tensions.
“Gold remains vulnerable to further losses as the inverse relationship between the precious metal and the greenback continues to materialize and our client sentiment report shows retail traders are still long on bullion,” Song said.
Spot gold may retest support at $1,188 per ounce, according to Reuters technical analyst Wang Tao.
Among other precious metals, spot silver was up 0.1 percent at $14.10 per ounce, having touched its lowest since January 2016 at $13.90 in the previous session.
Platinum fell 0.3 percent to $785 per ounce, while palladium lost 0.4 percent to $971 an ounce. (Reporting by Nallur Sethuraman in Bengaluru Editing by Joseph Radford and Subhranshu Sahu)