* Gold finds strong resistance at $1,200 -ANZ
* Silver hits 2-1/2 year low
* Palladium off multi-week highs hit on Monday (Recasts, updates prices, adds detail)
By Maytaal Angel
LONDON, Sept 11 (Reuters) - Gold fell on Tuesday as the dollar resumed its ascent amid broad risk-off sentiment, looming U.S. interest rate increases and prospects for escalating Sino-U.S. trade tensions.
Silver also succumbed to the market pressures, hitting a 2-1/2 year low.
Since its April peak gold has dropped more than 12 percent as a trade war between China and the U.S. has driven investors to seek safety in the dollar rather than in gold, a traditional safe haven.
Bearish bets on Comex gold have risen to record levels while investors have liquidated exchange-traded gold fund holdings.
“(There’s) a generally strong dollar backdrop, which is keeping (gold) under pressure. The market is very short gold futures,” said ICBC Standard Bank analyst Marcus Garvey.
He added, however, that financial positions are becoming so short that it would not take much of a surprise to spark a short-covering rally.
“There’s a good chance gold recovers back to $1,200 and possibly a bit higher,” Garvey said.
Spot gold fell 0.5 percent to $1,189 an ounce at 1336 GMT. U.S. gold futures slid 0.5 percent to $1,194.20.
The dollar edged up versus a basket of major currencies despite easing concerns over Italian debt and a brief rally in the British pound sparked by hopes of a Brexit deal with the European Union.
Broadly underpinning the greenback were Friday’s comments from U.S. President Donald Trump that he was ready to impose tariffs on virtually all Chinese imports to the United States and strong U.S. jobs data.
The jobs data last week cemented expectations that the Federal Reserve will raise U.S. interest rates in September. That would be the third increase this year, with expectations of another hike in December.
Higher interest rates increase bond yields, making non-yielding bullion less attractive. They also tend to boost the dollar, making dollar-priced gold costlier for non-U.S. investors.
Gold is finding strong resistance at $1,200, with investors selling into any rallies that threaten to push it above that level, ANZ analysts said in a research note.
Physical gold buying waned slightly in Asia this week as investors waited to see if prices would fall further, traders said.
Silver fell 1.3 percent to $14 an ounce, having hit its lowest since January 2016 at $13,91.
Platinum slipped 0.1 percent to $783.90 while palladium was down 0.7 percent at $967.50 after hitting its highest in nearly 12 weeks at $991.15. (Additional reporting by Nallur Sethuraman in Bengaluru Editing by David Goodman and Kirsten Donovan)