February 11, 2014 / 4:10 AM / 4 years ago

PRECIOUS-Gold extends gains to near 3-month high ahead of Yellen testimony

* Spot gold gains 1 pct to highest since mid-November
    * U.S. gold futures in longest winning streak since August
    * Coming up: Fed Chair Janet Yellen House testimony 1500 GMT

 (Adds Indian gold imports, updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Feb 11 (Reuters) - Spot gold climbed to its
highest in nearly three months on Tuesday, as investors look for
hints from the new Federal Reserve chief later in the session on
whether the pace of its stimulus tapering may be slowed.
    U.S. gold futures rose 1 percent, gaining for a fifth day in
a row, in the longest winning streak since August 2012.
    Prices were also supported by a weaker U.S. dollar, which
was wallowing near a two-week low against a basket of major
    Fed Chair Janet Yellen gives her first testimony before the
House Financial Services Committee at 1500 GMT, and will likely
face questions on the state of the labour market and the future
pace of tapering. 
    Recent weak economic data, including Friday's nonfarm
payrolls report, has many in the market anticipating that the
wind down of the bond-buying stimulus would be slowed.
    "A hint of a Fed pause is not entirely out of the question
given the weak unemployment data we have been getting of late,
coupled with a slew of other manufacturing statistics that are
pointing to further deceleration," INTL FC Stone analyst Edward
Meir said.
    If Yellen does indicate that the Fed could pause the
tapering due to deteriorating economic conditions, it would
trigger a rally in both gold and U.S equities, breaking the
recent inverse relationship between the two, Meir said. 
    Spot gold was up 0.8 percent at $1,283.95 an ounce by
0745 GMT, after gaining 1.4 percent in the past two sessions.
The metal rose as much as 1 percent to $1,287.01 earlier in the
session - the highest since mid-November.
    U.S. gold futures for April delivery rose as much as
1 percent to $1,287.50 - also the highest in almost three
    Gold is often seen as an alternative investment to risky
assets such as stocks though some have questioned its role as a
safe-haven given the huge fund outflows last year. 
    "The strength in prices should be treated as selling
opportunities," said Mark Keenan, head of commodities research
for Asia at Societe Generale. 
    "These pockets of stability either driven by short-covering
or cautious safe-haven demand haven't demonstrated any sustained
strength," he said. 
    Silver also rose as much as 1 percent, tracking gold.
    Platinum gained as strikes in South African mines
continued. Top platinum producers and the AMCU union are set to
hold separate meetings with a state mediator this week to
discuss the stoppage over wages. 
    In the physical markets, Chinese demand eased due to the
gains in prices. Premiums for 99.99 percent purity gold on the
Shanghai Gold Exchange eased to $7 an ounce from
$12 on Monday.
    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.  
    PRICES AT 0745 GMT     
 Metal             Last       Change    Pct chg
 Spot gold           1283.95      9.66      0.76
 Spot silver            20.1      0.07      0.35
 Spot platinum        1385.2      3.95      0.29
 Spot palladium        717.1      2.35      0.33
 Comex gold           1283.8       9.1      0.71
 Comex silver         20.105    -0.007     -0.03
 Euro                 1.3661                    
 DXY                  80.597                    
 COMEX gold and silver contracts show the most
 active months
 (Editing by Muralikumar Anantharaman and Ed Davies)
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