* Gold hits 3-month high, dollar eases ahead of Yellen
* Investors wager on dovish tone, even if tapering affirmed
* Global shares edge higher
By Francesco Canepa
LONDON, Feb 11 Gold hit a three-month high and
global shares rose on Tuesday as investors wagered that the new
head of the U.S. Federal Reserve would renew the bank's pledge
to keep policy ultra-easy at her first testimony to Congress.
Fed Chair Janet Yellen is likely to face questions on the
state of the labour market and the future pace of tapering when
she appears before the House Financial Services Committee at
1500 GMT. Her testimony will be released at 1330
Dealers said the latest betting was that while the tone was
likely to be upbeat on the economy, Yellen would emphasise that
interest rates were set to remain near zero for some time.
"The Fed will want to hold the market's hand as much as
possible over this period so they will be extremely keen to try
and comfort the market in any way they can," said Stewart
Richardson, partner at macro hedge fund RMG Wealth Management.
"At the moment this is taking the form of 'don't worry
interest rates will remain low for an extended period'."
Just that hope was enough to lift gold 0.7 percent to
1,283.70, just off its highest level since mid-November, hit
earlier in the session. U.S. gold futures gained for a fifth day
in a row, their longest winning streak since August 2012.
The dollar fell to its lowest level in almost two weeks
against the euro and a basket of major currencies
"(Yellen)'s known as a dove, but it's the first time the
question (arises) of whether she wants totally to continue this
line from her predecessors or shake things up," said Simon
Smith, FxPro's head of research. "I don't think she will (shake
things up), but it's a bit of a risk event for the dollar."
The FTSEurofirst 300 index of European shares rose
0.8 percent, with strong updates from car maker BMW
and measurement technology group Hexagon adding to
the positive sentiment.
The broader MSCI All-Country World Index was
up 0.4 percent and U.S. stock futures were also trading firmer
with the S&P 500 e-mini contract up 0.5 percent.
Oil prices also rose, with Brent crude edging above
$109 a barrel.
Analysts have generally assumed Yellen will stick with the
script and reiterate that the Fed will continue to scale back
its asset buying as long as the economy improves as expected.
"The market is more ready to be relieved than to cheer on
Yellen's comments, which are expected to clarify uncertainties
about the Fed's tapering pace and interest rate hike plans,"
said Mirae Asset Securities analyst Chung Seung-jae in Seoul.
"In the absence of a Fed meeting in February, her
testimonies are seen as the biggest risk event for the month."
One argument for staying the course on tapering is that bond
investors have learned to live with the idea after fears that
interest rates would rise led to bouts of selling last year.
Yields on U.S. 10-year Treasury paper have
settled back at 2.67 percent, well below recent highs of 3.04
percent and less of a threat to the housing market.
Investors, too, have accepted that tapering is not the same
as tightening and have pushed out the timing of the first actual
hike in the Fed funds rate. A move is not fully priced in until
late 2015 , a view Yellen is likely to endorse.