PRECIOUS-Gold rises 1.4 pct to three-month high after Yellen comments

Tue Feb 11, 2014 3:35pm EST

* Fed Chair Yellen says to continue measured tapering
    * Gold on track for biggest one-day gain in three weeks
    * Bullion supported by India's plan to ease import ban
    * Coming up: US Federal Budget Wednesday

 (Adds details on technicals, equities link, updates prices)
    By Frank Tang and Jan Harvey
    NEW YORK/LONDON, Feb 11 (Reuters) - Gold rose to a
three-month high on Tuesday, gaining nearly 1.5 percent after
incoming Federal Reserve Chair Janet Yellen made it clear she
would not make any abrupt changes to the central bank's
commitment to a measured tapering of bond purchases.
    Technical buying also accelerated gains after the metal
crossed above tough resistance at $1,280 an ounce. 
    Bullion's rally on Tuesday reversed its recent strong
inverse link with equities, which have been pressured by
economic uncertainties and emerging-market jitters. The S&P 500
index climbed 1.3 percent. 
    In her testimony before the U.S. House Financial Services
Committee, Yellen said she strongly supports the monetary policy
approach driven by her predecessor, Ben Bernanke. 
    "The overall tone of Yellen's comment is a carbon copy of
the Fed's existing policy under Bernanke, so the market is
relieved that there will be no tightening any time soon," said
Bill O'Neill, partner of New Jersey commodities investment firm
LOGIC Advisors.
    Spot gold was up 1.4 percent at $1,291.51 an ounce by
 3:11 p.m. EST (2011 GMT), its biggest one-day gain in three
weeks. Earlier on Tuesday, it hit $1,293.44 - the highest price
since Nov. 14. 
    U.S. COMEX gold futures for April delivery settled up
$15.10 an ounce at $1,289.80, with trading volume about 20
percent below its 250-day average, preliminary Reuters data
showed.
    Yellen's testimony comes at a tricky time given two months
of soft employment growth and as a deadline looms on raising the
U.S. government borrowing limit before a possible debt default.
    Speculation that the Fed might hold off further reduction of
stimulus had strongly supported gold by keeping interest rates
at rock bottom while stoking inflation fears.
    Analysts said, however, a resilient equities market and
improving economic outlook could thwart any further gold rally.
    In the physical markets, bullion was also underpinned after
India's trade ministry said it has recommended easing curbs on
gold imports, after a 77 percent drop in imports for January
that helped narrow the country's trade deficit. 
    India had imposed curbs last year including a record 10
percent duty to discourage gold purchases.
    Among other precious metals, silver gained 0.9
percent to $20.21 an ounce. Platinum climbed 0.3 percent
to $1,384.74 an ounce, while palladium rose 0.1 percent
to $715.30 an ounce.
 3:11 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1289.80  15.10   1.2  1273.50 1294.40  145,125
 US Silver MAR  20.153  0.041   0.2   19.915  20.290   54,422
 US Plat APR   1387.80   1.90   0.1  1380.00 1394.90    7,465
 US Pall MAR    716.35  -0.40  -0.1   714.20  723.00    3,251
                                                               
 Gold          1291.51  17.22   1.4  1274.18 1293.44         
 Silver         20.210  0.180   0.9   19.960  20.260
 Platinum      1384.74   3.49   0.3  1381.50 1392.50
 Palladium      715.30   0.55   0.1   718.50  722.00
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        151,633   166,401   185,409     17.19   -0.20
 US Silver       70,658    45,064    56,275     24.57    1.33
 US Platinum      7,859    10,943    13,290     19.37    0.94
 US Palladium     3,812     4,778     5,596     17.86   -0.33
                                                               
  

 (Additional reporting by Clara Denina in London, A.
Ananthalakshmi in Singapore; editing by William Hardy and
Meredith Mazzilli)
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