* Dollar steadies after biggest weekly gain this year
* Speculators cut bullish COMEX gold bets for seventh week
* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl
(Updates prices) LONDON, Nov 6 (Reuters) - Gold edged back above $1,270 an ounce on Monday as a steadier tone to the dollar and a drop in bond yields tempted some buyers back to the metal after its third straight weekly decline. Prices remained under pressure from expectations that the Federal Reserve is on track to lift U.S. interest rates for a third time this year next month.
Spot gold was up 0.2 percent at $1,271.65 an ounce at 1305 GMT, while U.S. gold futures for December delivery
were up $3.20 an ounce at $1,272.40. The dollar steadied on Monday after its biggest weekly rise this year, while Germany's benchmark bond yield hit a near two-month low as investors awaited clues on the European Central Bank's asset purchase plans. U.S. 10-year yields also hit their weakest in two weeks. "Gold remains stuck in a $1,263 to $1,282 range, with lower bond yields being offset by a stronger dollar," Saxo Bank's head of commodity research, Ole Hansen, said, adding that the market was watching President Donald Trump's Asia tour, which will focus on North Korea's nuclear missile programs and trade. "With Trump in Asia we could see North Korea talk heat up at any point," he added. "The Japanese yen was particularly weak overnight before consolidating and that is probably the key right now given the supportive turnaround seen in bonds during the past week." Gold has drifted lower over recent weeks, pulling back 2.5 percent from its mid-October peak as expectations for a Fed interest rate increase were shored up by upbeat U.S. data. Gold is highly sensitive to rising U.S. rates, as these increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares , declined by just over five tonnes
last week, data from the fund showed, after a 0.3-tonne outflow on Friday. Hedge funds and money managers reduced their net long position in COMEX gold contracts for the seventh straight week, in the week to Oct. 31, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. "Speculative financial investors are still withdrawing from gold," Commerzbank said on Monday. "Net long positions decreased
Among other precious metals, silver was 0.7 percent higher at $16.92 an ounce, platinum was up 0.5 percent at $923.40, and palladium was up 0.5 percent at $1,001.90.
(Additional reporting by Vijaykumar Vedala in Bengaluru, editing by Louise Heavens)