Bengaluru — Gold prices drifted higher in Asian trade on Wednesday, extending gains into a second session, as the US dollar softened against China’s yuan and the euro.

Spot gold rose 0.2% to $1,213.56/oz at 3.20am GMT, after rising 0.4% in the previous session. US gold futures were up 0.3% at $1221.70/oz.

"The dollar-CNH [yuan] is a bit under pressure this morning and we’re seeing some buying on the back of that," a Hong Kong-based trader said.

China’s yuan held firm near a one-week high versus the dollar early on Wednesday, following firmer equities, extending the rise after the central bank last week took steps to curb the currency’s decline.

Against a basket of currencies, the dollar eased 0.1% as its recent rally on the concern over escalating trade tensions showed signs of fading.

A weaker dollar makes greenback-denominated gold cheaper for holders of other currencies.

"Gold is consolidating here for the moment. The dips on the dollar still seem to be bought so I am sceptical to call a bottom on gold," the trader said.

Meanwhile, Asian shares rose on Wednesday due to firmer Wall Street earnings while the expectation for increased Chinese stimulus helped take the edge off wider concern about the worsening China-US trade dispute.

The US will begin collecting 25% tariffs on another $16bn in Chinese goods on August 23, the US trade representative’s office said on Tuesday as it published a final tariff list targeting 279 imported product lines.

The European parliament has agreed to ease tough new liquidity rules for banks trading gold, marking a success for the London Bullion Market Association’s (LBMA) campaign to revise the plans.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 0.15% to 787.53 tonnes on Tuesday.

Gold-backed ETFs saw outflows in North America, Europe and Asia in July as a strong US dollar helped weaken gold prices, the World Gold Council said on Tuesday.

Among other precious metals, silver rose 0.5% at $15.40/oz.

Platinum was up 0.1% at $826.99/oz, while palladium climbed 0.8% to $913.30.