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 US 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.
US gold futures for August delivery were 0.3 percent lower at $1,252.30 an ounce.
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 US dollar is attracting haven flows," said Stephen Innes, APAC trading head at OANDA.
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