(Updates prices; adds comment, second byline; previous datelineLONDON)
* Gold hits more than 1-1/2 year low last week
* Weak prices stimulating physical demand in Asia
* Bearish speculators remain in control
* Investors looking ahead to U.S. Fed speech on Friday
* Technicals suggest gold has further to fallBy Renita D. Young and Peter HobsonNEW YORK/LONDON, Aug 20 (Reuters) - Gold prices inchedhigher on Monday after touching a more than 1-1/2 year low lastweek as China's strengthening currency made the metal cheaperfor buyers in the world's biggest gold consumer.Gold has tumbled 13 percent from an April high as the dollarappreciated against the yuan and other currencies, raising thecost of dollar-priced bullion outside the United States. That pressure eased after news of U.S.-China trade talksplanned for this week helped lift the yuan, said Saxo Bankanalyst Ole Hansen. Spot gold gained 0.3 percent at $1,188.10 an ounce by1:35 p.m. EDT (1735 GMT), after Thursday's dip to $1,159.96, thelowest since January 2017.
U.S. gold futures for December delivery settled up$10.40, or 0.9 percent, at $1,194.60 per ounce.
"Value-buying in this oversold territory is highly likely tounderpin gold prices," Religare Securities analyst SugandhaSachdeva said. Lower prices are sparking a revival in demand forphysical gold in Asia. Lower prices have also sparked an increase in gold optionstrading from bargain-hunters who are pushing bullion priceshigher, said ThinkMarkets.com analyst Naeem Aslam. ShouldChina's yuan continue to strengthen, gold would become cheaperfor Chinese investors.However, "the price really needs to break above the $1,200mark in order for us to have any kind of confidence that thebulls are back in power. Otherwise it would be very much like abull trap," Aslam said.Downward pressure from speculators remains strong. Bets onlower prices by hedge funds and money managers on the Comexexchange continue to build and outweigh bets on higher prices by77,273 lots, the largest quantity ever recorded.Technical and momentum indicators suggest gold will falltoward support at its January 2017 low of $1,146.20, saidanalysts at ScotiaMocatta. Fibonacci resistance was at$1,185.30, they said.Investors are anticipating a Friday speech by U.S. FederalReserve Chairman Jerome Powell at an economic symposium inJackson Hole, Wyoming, where he might give clues about the paceof U.S. interest rate rises, analysts said.
Rising interest rates make gold, which pays no interest andcosts to store and insure, less attractive.Spot silver lost 0.7 percent at $14.66 an ounce afterhitting its lowest since February 2016 last week.
Platinum gained 1.1 percent at $789.99 per ounce, butremained close to its lowest in a decade.
Palladium , which last week traded at its weakestsince July 2017, was flat at $910.60 an ounce. Earlier,palladium hit $923.75, its highest since Aug. 2. (Additional reporting by Nallur Sethuraman in BengaluruEditing by David Evans and Richard Chang)
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