* Bernanke comments taken to support QE expectations
* Euro climbs vs dollar, lifting gold to 2-week high
* Speculators cut gold long bets for third week (Updates, refreshes prices, adds comment)
By Jan Harvey
LONDON, March 26 (Reuters) - Gold prices rose 1 percent on Monday after comments from U.S. Federal Reserve Chairman Ben Bernanke that faster growth will be needed to boost employment supported expectations that further quantitative easing measures may be necessary.
Spot gold was up 1.1 percent at $1,680.06 at 1411 GMT. It earlier hit a two-week high of $1,683.79 after Federal Reserve Chairman Ben Bernanke said the U.S. economy needed to grow more quickly if it is to produce enough jobs to bring down the unemployment rate.
“I think it (rose) on the back of Bernanke’s comments, which people have taken to mean that further funding might be required,” Simon Weeks, head of precious metals at Scotia Mocatta, said. “I think people have taken that to mean that gold is still going to be in demand.”
U.S. gold futures for April delivery were up $19.00 an ounce at $1,681.40.
The euro hit its highest against the dollar in three weeks and the U.S. unit slid to a three-week low against the Swiss franc on Monday after Bernanke’s comments.
Sentiment towards the euro remains cautious, however, as investors worried about the troubles facing the euro zone economy.
While concerns over the bloc’s debt crisis were a key factor driving gold to record highs last year, it has since re-established its usual inverse relationship with the dollar as the U.S. unit takes precedence as investors’ haven of choice.
“If the dollar is going to strengthen over the next couple of days, gold should see more downward pressure,” said Standard Bank analyst Walter de Wet.
“(But) looking past the next couple of weeks, I think the rally is not over,” he added. “In real terms interest rates remain negative, and we expect them to remain negative for at least another two years.”
Data from the U.S. Commodity Futures Trading Commission on Friday showed money managers in gold futures and options cut their bullish bets for a third straight week to the weakest level in two months.
“Declining a hefty 3.1 million ounces, the Comex gold book now sits at a relatively modest 17.58 million ounces, bringing positioning to its lowest level since the week of Jan. 10 and some 53.1 percent of the all-time high,” said UBS in a note.
“In just three weeks, spec net longs have collapsed by 10 million ounces. So in theory, from a positioning perspective, gold’s spec baggage looks relatively light... which suggests some upside price direction is possible.”
Volume data from the Shanghai Gold Exchange suggests demand from China, the world’s second largest consumer of the precious metal, is soft, the bank added.
A Reuters poll suggested India’s decision to double gold import duty to four percent could cut imports to the number one global consumer by a third in 2012, to their lowest level in two years.
Chinese and Indian demand has a huge impact on gold prices.
“Those two countries together make up about 42 percent of total demand, compared to 23 percent of total demand five or six years ago,” Nick Holland, chief executive of miner Gold Fields, told the Reuters mining summit on Monday.
“Those are two economies that are likely to grow at a significant pace, certainly relative to the West,” he added. “They have a strong affinity for gold, and they also have an increasing number of the population who are being urbanised. Of the extra income they get, some will find its way into gold.”
“I believe that is a fairly good underpin for the gold price.”
Silver rose 1.5 percent to $32.68 an ounce. The gold/silver ratio, or the number of silver ounces needed to buy an ounce of gold, eased back to 51.44 from 52.1 on Friday.
Spot platinum was up 0.9 percent at $1,635.49 an ounce, while spot palladium was up 0.9 percent at $659.25 an ounce. (Additional reporting by Michelle Martin. editing by William Hardy)