* Dollar falls after 10-day winning streak
* SPDR Gold Trust holdings rise for 11th day
* Silver at three-month top, palladium at three-week high
(Updates prices; adds comment, byline, NEW YORK dateline)
By Marcy Nicholson and Peter Hobson
NEW YORK/LONDON, Feb 16 Gold rose on Thursday as
the dollar weakened after a 10-day winning streak and investors
took the opportunity to buy bullion as a hedge against political
uncertainty in the United States and Europe.
Spot gold rose 0.7 percent to $1,240.86 an ounce by
2:37 p.m. EST (1937 GMT), and is up about 10 percent from a
mid-December low. U.S. gold futures settled up 0.7
percent at $1,241.60.
Concern over U.S. President Donald Trump's policies, as well
as elections in the Netherlands, France and Germany this year,
have fueled gold's rise to a peak of $1,244.67 on Feb. 8.
But the prospect of a higher dollar and U.S. Treasury yields
after U.S. Federal Reserve Chair Janet Yellen said that U.S.
interest rates may need to be raised in March pushed gold to
$1,216.41 on Wednesday, its lowest since Feb. 3.
A stronger dollar makes gold more expensive for holders of
other currencies, while higher yields increase the opportunity
cost of holding non-yielding bullion. Higher interest rates
would lift yields further.
"It's a tug of war between a higher probability of a U.S.
rate hike in March and upcoming elections around Europe, which
are creating uncertainty and demand for safe assets," said Jens
Pedersen at Danske Bank.
U.S. residential construction and employment data on
Thursday showed that the economy continued to rebound.
"As I see it, a relatively small group of hedge funds and
institutional speculators have been calling the tune for gold,
trading the recent range, buying on dips, selling on rallies,
and gradually adding to their physical holdings - a behavioral
pattern we expect will continue within a rising trading range -
at least until a price above the $1,300 an ounce level is well
established," said Jeffrey Nichols, senior economic adviser to
Holdings of SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, increased for an 11th consecutive day on
In other precious metals, palladium was up 0.3
percent, at $791.75 an ounce, after tapping $794.90, its highest
since Jan. 24.
The metal used in emission-controlling catalytic converters
for the automotive industry has risen 17 percent this year.
But car sales in the United States and China in the first
quarter are likely to disappoint investors and cause a
correction that could drive prices below $700, said Julius Baer
analyst Carsten Menke.
Silver was up 0.5 percent at $18.07, after reaching a
three-month high at 18.13. Platinum was 0.6 percent lower
(Additional reporting by Arpan Varghese in Bengaluru; Editing
by Adrian Croft and Lisa Shumaker)