* Euro sinks on worries over European banks' exposure to Turkey
* Spot gold remains neutral in $1,206-$1,220/oz range -technicals
* Speculators raised net gold shorts to record -CFTC
By Apeksha Nair
BENGALURU, Aug 13 (Reuters) - Gold prices extended declines into a third session on Monday, as the U.S. dollar climbed to a 13-month high against major peers amid financial crisis in Turkey.
Spot gold XAU= had dropped 0.2 percent to $1,208.50 an ounce by 0655 GMT, hovering not far from a 17-month low of $1,204 hit earlier in August. U.S. gold futures GCcv1 were down 0.3 percent at $1,215.7 an ounce.
"Gold today was heavy as the USD-CNH and USD-CNY continued to advance," MKS PAMP Group wrote in a note.
The U.S. dollar rose against China's yuan CNH= CNY= on Monday and held steady after hitting a 13-month high against a basket of six major currencies .DXY . CNY/ USD/
"In an environment of broad dollar strength, gold struggles ... but what we clearly see is some support and that comes from uncertainty as equities are negatively affected," said Dominic Schnider at UBS Wealth Management in Hong Kong.
Asian shares fell on Monday and the euro hit one-year lows against the dollar as a renewed rout in the Turkish lira drove demand for safe harbours, including the U.S. dollar, Swiss franc and yen. MKTS/GLOB
The Turkish currency had plunged to a new record low on worries over President Tayyip Erdogan's influence over the economy and worsening relations with the United States. has drafted an economic action plan and will start implementing it on Monday morning to ease investor concerns, Finance Minister Berat Albayrak said. China's central bank on Friday said it would maintain its prudent and neutral monetary policy to ensure ample liquidity and keep the yuan largely stable, after the currency earlier this month hit a 14-month low versus the dollar amid ongoing Sino-U.S. trade tensions. U.S. dollar, in which gold is priced, has benefited from recent global political and trade tensions, while bullion has not despite being widely seen as a safe-haven asset.
"The story would look a little different if you had dollar strength on its own in a sense that it's not risk-off driven ... Gold might find it difficult to breach $1,200 in a risk-off world," Schnider said.
Spot gold remains neutral in a range of $1,206-$1,220 per ounce and an escape could suggest direction, said Reuters technicals analyst Wang Tao. speculators added 22,195 contracts to their net short position in the week to Aug. 7, bringing it to 63,282 contracts, the largest since records became publicly available in 2006, U.S. Commodity Futures Trading Commission (CFTC) data showed. other precious metals, silver XAG= was little changed at $15.27 an ounce, after earlier slipping to the lowest since July 19 at $15.19.
Platinum XPT= shed 1 percent to $819.40, while palladium XPD= lost 1.2 percent to $899.50.