* U.S.-China trade tensions continue
* Speculators trim net short positions in gold, silver
* Platinum is undervalued based on fundamentals -analyst (Updates prices, headline; adds comment, second byline, dateline)
By Renita D. Young and Eric Onstad
NEW YORK/LONDON, Sept 17 (Reuters) - A softer dollar and short-covering lifted gold on Monday after two sessions of declines, but investors braced for more U.S.-China trade tensions, with some buying bullion as a safe haven.
A gauge of global equity markets eased and the U.S. dollar index slipped against a basket of major currencies, boosting gold, as investors took a dim view of an expected new round of tariffs from Washington on Chinese goods, which would escalate a simmering U.S.-Sino dispute over trade.
“Much of (gold’s move) is dollar-driven today. There’s probably some safe-haven bids coming in. There’s a bit of worry about China helping gold,” said Bart Melek, head of commodity strategies at TD Securities.
Spot gold was up 0.7 percent at $1,201.01 an ounce by 1:37 p.m. EDT (1737 GMT), after hitting a 5-day low of $1,192.57 and falling 0.6 percent on Friday, when it marked its third straight weekly decline. U.S. gold futures for December delivery settled up $4.70, or 0.4 percent, at $1,205.80 per ounce.
U.S. President Donald Trump was expected to announce new tariffs on $200 billion in Chinese goods as early as Monday, and China has said it would retaliate.
“The continued talk of an escalating trade war has investors heading for the sidelines, taking a wait-and-see posture before taking on any large positions,” said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
Meanwhile, net short positions in gold are still at a high level, Commerzbank said in a note, “...so there is further potential for short covering and therefore for higher prices from this side.”
Gold prices have declined more than 12 percent from April, hurt by intensifying global trade tensions and rising U.S. interest rates.
Although gold is generally presumed to be a safe-haven asset, the months-long trade rift between Washington and Beijing has prompted investors largely to opt for the U.S. dollar in the belief that the United States has less to lose from the dispute.
In other precious metals trading, spot silver climbed 1 percent at $14.18 an ounce. Palladium gained 0.5 percent at $983.25, while platinum increased 0.7 percent at $797.50.
Although platinum last month touched a low of $751.25, not seen since the financial crisis in 2008, the supply and demand situation was different, said Mitsubishi commodities analyst Jonathan Butler.
“Although we’re looking at a market that’s in a small surplus this year, it’s still a very different story from 2008, it doesn’t justify platinum having a $700 handle,” he said. (Additional reporting by Nallur Sethuraman in Bengaluru; Editing by Emelia Sithole-Matarise and Dan Grebler)