* Speculators trim net short positions in gold, silver

* Spot gold may test support at $1,193/oz - technicals

(Adds comments on platinum, updates prices)

By Eric Onstad

LONDON, Sept 17 (Reuters) - A softer dollar lifted gold onMonday after two sessions of declines, but investors preparedfor more weakness as simmering U.S.-China trade tensionssuggested the currency would stay supported.

Spot gold XAU= was up 0.5 percent at $1,199.44 an ounce by1300 GMT after falling 0.6 percent on Friday, when it marked itsthird straight weekly decline.

U.S. gold futures GCv1 added 0.2 percent to $1,203.20 anounce.

The dollar index .DXY was down 0.4 percent at 94.588 afterseeing its biggest daily rise since Aug. 23 on Friday. FRX/

"The main issue is that this concern over trade tensionsbetween the U.S. and China is translating into a strongerdollar, and that is weighing on gold," said Jonathan Butler,commodities analyst at Mitsubishi in London.

China's Foreign Ministry said on Monday that the governmentwould respond if the United States implements new tariffs, aheadof U.S. President Donald Trump's expected announcement of newduties on $200 billion in Chinese goods. urn:newsml:reuters.com:*:nS6N1V601D

"I think we'll continue to see gold under pressure. As longas the dollar remains relatively well supported, yields continueto rise and the U.S. economic growth story remains in place,it's hard to see where a strong rally would come from in gold,"Butler said.

Gold prices have declined more than 12 percent from April,hurt by intensifying global trade tensions and rising U.S.interest rates.

Spot gold may retest support at $1,193 per ounce afterbouncing moderately into a range of $1,197-$1,200, according toReuters technical analyst Wang Tao. urn:newsml:reuters.com:*:nL3N1W31G7

Though gold is generally presumed to be a safe-haven asset,the months-long trade rift between Washington and Beijing hasprompted investors to largely opt for the U.S. dollar in thebelief that the United States has less to lose from the dispute.

Investors trimmed their net short position in Comex gold andsilver in the week to Sept. 11, U.S. data showed. urn:newsml:reuters.com:*:nL2N1W01LG

Among other precious metals, spot silver XAG= climbed 1.2percent to $14.20 an ounce.

Palladium XPD= edged up 0.3 percent to $980.40 whileplatinum XPT= gained 0.9 percent to $798.99 an ounce.

Butler said although platinum last month touched lows notseen since the financial crisis in 2008, the supply and demandsituation was different.

"Although we're looking at a market that's in a smallsurplus this year, it's still a very different story from 2008,it doesn't justify platinum having a $700 handle," he said.

"Diesel is in decline, but we still have a healthy 3 millionounces or so of demand from that source this year, as opposed to2 or 2.5 million in 2008."

(Additional reporting by Nallur Sethuraman in Bengaluru;Editing by Jan Harvey) ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO ; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))