* Gold notches biggest daily percentage rise in 3 months
* Spot prices poised to end 2016 higher
* GRAPHIC-2016 metal returns: tmsnrt.rs/2eqHKkL
(New throughout, adds comments, forecast, milestones, adds NEW
By Devika Krishna Kumar and Clara Denina
NEW YORK/LONDON, Dec 29 Gold prices rose 1
percent to their highest in more than two weeks on Thursday as
U.S. bond yields declined on waning risk appetite, reducing the
U.S. dollar's appeal against safe-haven currencies such as the
Bullion bounced back on Thursday after hitting a 10-month
low on Dec. 15 as solid U.S. economic data gave the U.S. Federal
Reserve the confidence to raise interest rates for the first
time in a year.
"Gold is not out of the woods yet but yields are a bit lower
and the dollar is weaker, especially against the yen and
yen-gold has showed a phenomenal correlation since the U.S.
election," Ole Hansen, SaxoBank's head of commodity research,
Gold fell more than 8 percent in November as U.S. Treasury
yields rose after Donald Trump's election led to speculation his
commitment to infrastructure spending would spur growth.
Spot gold hit $1,159.50 an ounce during the session,
the highest since Dec. 14, and was up 1.2 percent at $1,155.45
by 2:32 pm EST (1451 GMT). The metal also notched its biggest
daily percentage gain since late September.
U.S. gold futures ended the session up 1.5 percent
at $1158.1 an ounce.
The dollar fell 0.7 percent against a basket of six
main currencies, mostly due to the yen's strength and profit
taking after recent gains. The benchmark 10-year U.S. Treasury
yield slipped to two-week lows as the bond market
The U.S. central bank has signalled that it expected three
more increases next year, up from a previous projection of two.
Gold is highly sensitive to rising interest rates, which
lift the opportunity cost of holding non-yielding assets, while
boosting the dollar, in which it is priced.
However, gold prices are still 8 percent higher than at the
start of the year and were heading for the first annual increase
after three years of declines.
"The outlook projected by the U.S. Federal Reserve along
with the strong employment figures indicate positive growth for
the economy as justified with the interest rate hikes. Hence
gold has underperformed, and could close at under $1,145 this
year," said Mihir Kapadia, chief executive of Sun Global
However, if the incoming U.S. administration implements
inward looking policies, gold may touch $1,500 per ounce,
propelled by investor fears, he said.
Gold is usually seen as a refuge from riskier assets such as
China's net gold imports in November via its main conduit
Hong Kong dropped 17.8 percent from October to the lowest in 10
months, data showed on Thursday.
Among other precious metals, silver was up 0.62
percent at $16.11 an ounce. Platinum was 0.2 percent
lower at $895.49, while palladium climbed 1.09 percent to
$672.47 an ounce.
(Additional reporting by Swati Verma in Bengaluru; Editing by
Adrian Croft and Richard Chang)