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PRECIOUS-Trump helps gold scale highest levels since November

* SPDR holdings rise for the first time since U.S. election
    * Long gold positions rise for first time in nine weeks
    * Weak physical market demand expected to cap gold's gains

 (Updates prices)
    By Pratima Desai
    LONDON, Jan 16 (Reuters) - Gold climbed on Monday to its
highest in more than seven weeks on buying fuelled by political
uncertainty after comments by U.S. President-elect Donald Trump
on NATO and China. 
    Spot gold was up 0.5 percent at $1,203.8 an ounce by
1436 GMT from an earlier $1,207.86, it highest since Nov. 23.
U.S. gold futures were up 0.6 percent at $1,203.20.
    Last week Trump said that the "One China" policy on Taiwan
was up for negotiation. China retaliated by saying it would
"take off the gloves" and act strongly if Trump continues to
"provoke" once he takes office. 
    His comments on NATO being obsolete have also made investors
nervous. 
    "There's the tussle between China and the United States over
Taiwan. Trump has been talking to Taiwan, which the Chinese
don't like. His comments on NATO are seen as negative," said
Julius Baer analyst Carsten Menke.
    Investor interest was indicated by the largest physically
backed exchange-traded fund, New York's SPDR Trust,
holdings of which rose for the first time since Nov. 9, the day
after Trump's election victory. 
    Hedge funds and money managers also raised their net long
position in COMEX gold contracts for the first time in nine
weeks in the week to Jan. 10, U.S. Commodity Futures Trading
Commission (CFTC) data showed on Friday.
    "The market is taking a reality check from Trump euphoria,
equity markets are moving sideways, the dollar has steadied and
bond yields are down, allowing gold to recover," Menke said.
    The stronger dollar has weighed on gold in recent months,
making it more expensive for holders of other currencies. Lower
bond yields boost the attraction of gold as a safe-haven asset.
    Much will depend on Trump and his plans for the U.S. economy
after his inauguration on Friday. But analysts generally expect
higher interest rates to strengthen the dollar this year,
capping gold's gains.
    "Markets are pricing in three to four rate hikes for 2017.
This will likely be the crippling factor for gold, as real
yields start to rise, particularly if inflation remains modest,"
Standard Chartered analysts said in a note.
    They added that Chinese buying has been hindered by
limitations around gold import quotas and that buying ahead of
the Lunar New Year has been soft.
   "India has attempted to wean the country off gold and demand
has been hampered by a raft of government policies clamping down
on the parallel economy," Standard Chartered said.
    Spot silver rose 0.2 percent to $16.83 an ounce.
    Platinum prices slipped by 0.1 percent to $982.75,
while palladium fell 0.4 percent to $746.47.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Ruth Pitchford and David Goodman)
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