Gold prices extended gains in Asian trade Tuesday as the euro surged after China's central bank set the yuan's daily mid-point at a record high, against the dollar, in five years.

Gold for immediate delivery was seen trading at 1238.29 an ounce at 11.45 Singapore time while U.S. gold futures for August delivery eased to $1,239.2 an ounce.

The Peoples Bank of China set the yuan's daily mid-point at 6.7980 against the dollar on Tuesday, in the second day of trading since China pledged at the weekend to make the yuan more flexible.

Analysts said, gold is likely to continue its upward movements on bargain hunting after investors saw the price decline almost $35 from its all-time high at $1,265.00 region.

On Monday, the precious yellow metal struck a record high near $1265 after Saudi Arabia's gold reserves almost doubled.

However the spot gold ended at $1,236.25 an ounce while US gold futures for August delivery settled down $17.60, or 1.4 percent, at $1,240.70 an ounce at the same time.

Gold also took advantage on worries the euro debt crisis would spread, the U.S. economy may be slowing and after China's move to make the yuan exchange rate flexible put pressure on the dollar.

Meanwhile, the world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings were unchanged at a record high at 1,307.963 tones.