February 26, 2018 / 4:41 AM / a year ago

PRECIOUS-Gold prices climb as dollar dips; market eyes US policy outlook

    * Focus on Fed chief Powell's congressional appearance
    * Spot gold's target adjusted to $1,347/oz - technicals

 (Updates prices)
    By Eileen Soreng
    Feb 26 (Reuters) - Gold prices climbed on Monday buoyed by a
weaker dollar as U.S. bond yields dipped, while investors were
cautious ahead of Federal Reserve Chairman Jerome Powell's first
congressional testimony.
    Powell will testify on the central bank's semi-annual report
on monetary policy and the economy on Tuesday, before the U.S.
House of Representatives' Financial Services Committee.
    Spot gold        was up 0.8 percent at $1,338.97 an ounce by
0805 GMT after rising to as high as $1,340.85, the highest in
about a week. Prices last week fell 1.4 percent, their biggest
drop in 2-1/2 months.
    U.S. gold futures         were up 0.9 percent at $1,341.9
per ounce.
    The dollar index       , which measures the greenback
against a basket of major currencies, was down 0.3 percent at
89.600. It had gained nearly 0.9 percent last week and pulled
away from a three-year low of 88.253 set on Feb. 16.       
    "Global growth appetite is okay. So it's not safe-haven
demand per se, but more of a currency influence," said OCBC
analyst Barnabas Gan.
    The U.S. Federal Reserve, looking past a recent stock market
sell-off and concern about inflation, on Friday said it sees
steady growth continuing and no serious risks on the horizon
that might pause its planned pace of rate hikes.             
    "But with the U.S.'s runaway deficit spending train stoking
inflationary fears, gold remains a crucial 'buy on dip' strategy
not only to hedge against inflation but also against another
untimely correction in equity markets," Stephen Innes, APAC
trading head at OANDA, said in a note.
    While inflation worries could spur safe-haven gold buying,
rising interest rates would pressure the metal because bullion
pays no interest.
    A bullish target at $1,354 per ounce for spot gold has been
adjusted to $1,347, based on its current momentum, according to
Reuters technical analyst Wang Tao.         
    Meanwhile, Asian share markets were in a cautious mood on
Monday as investors braced for an event-packed week headlined by
U.S. inflation data and the first House testimony by the new
head of the Federal Reserve, Jerome Powell.            
    Among other precious metals, silver        was up 1.1
percent at $16.72 an ounce.
    Palladium        was up 0.8 percent at $1,054.72 per ounce
after touching $1,058.40 earlier in the session, its highest
since Jan. 31.
    Platinum        rose 0.7 percent to $1,003.50 per ounce.

 (Reporting by Eileen Soreng in Bengaluru; editing by Joseph
Radford and Subhranshu Sahu)
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