September 7, 2018 / 7:16 AM / 3 months ago

PRECIOUS-Gold up as dollar slips against yen on trade jitters

* Fears new U.S. tariffs on China could come at any time

* Asia physical demand supports gold prices

* U.S. non-farm payrolls report due at 1230 GMT (Updates prices)

By Sethuraman N R

BENGALURU, Sept 7 (Reuters) - Gold extended gains on Friday as the dollar fell against the yen after a report suggested that U.S. President Donald Trump would next take up trade issues with Japan, while investors feared another round of Sino-U.S. tariffs any moment.

Spot gold was up 0.1 percent at $1,200.88 as of 0645 GMT, after it hit a near one-week high on Thursday at $1,206.98, and headed for a third straight session of gains.

U.S. gold futures rose 0.2 percent to $1,206.40 an ounce.

The dollar declined against the yen following a CNBC television report on Thursday that Trump told a Wall Street Journal columnist he might take on trade issues with Japan.

“The stronger yen versus dollar is leading to some buying in gold ... The recent low of around $1,160 in August is really the bottom in gold for now,” said Yuichi Ikemizu, Tokyo branch manager, ICBC Standard Bank.

“The next moves will mostly depend on the employment data tonight and the September Federal Reserve meeting. But it mostly looks like gold is slowly coming up and the dollar is coming off as gold is too oversold and the dollar has been overbought.”

Another big worry for investors was the public consultation period for proposed U.S. tariffs on an additional $200 billion worth of Chinese imports ended at 0400 GMT Friday. Tariffs could go into effect shortly afterward, though there was no clear timetable.

Trump has already challenged Mexico, Canada and the European Union on trade issues.

Meanwhile, markets will be closely watching a U.S. employment report due later in the day for cues on the pace of interest rate hikes by the Fed.

The payrolls report is expected to show a robust rise of 191,000, in part as July was temporarily depressed by the closure of the Toys R Us chain that month.

Current economic conditions are “as good as it gets” for the U.S. central bank, New York Federal Reserve bank President John Williams said on Thursday, with steady inflation and low unemployment allowing the Fed to continue gradually raising rates.

“Gold faces a quick correction if U.S. jobs data, inflation in particular comes in near or above target. The Fed has hiked two times in 2018 and is on course to lift rates twice more,” said Alfonso Esparza, a senior analyst at OANDA.

Gold has tumbled about 12 percent from a peak of $1,365.23 in April. Present levels have invoked a lot of physical buying in Asia, providing a support for prices, traders and analysts said.

Among other precious metals, spot silver was down 0.1 percent at $14.10 per ounce.

Platinum rose 0.1 percent at $791.60, while palladium fell 0.4 percent to $969.99. (Reporting by Nallur Sethuraman in Bengaluru; Editing by Subhranshu Sahu and Sunil Nair)

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