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PRECIOUS-Gold gains ahead of testimony from Fed's Yellen
February 14, 2017 / 11:26 AM / 9 months ago

PRECIOUS-Gold gains ahead of testimony from Fed's Yellen

    * Traders look to Yellen for clues on rate hikes
    * Dollar stumbles after Trump adviser quits
    * SPDR Gold holdings up 0.49 percent

 (Updates prices, adds detail)
    By Maytaal Angel
    LONDON, Feb 14 (Reuters) - Gold edged up on Tuesday as the
dollar crept lower after U.S. President Donald Trump's national
security adviser Michael Flynn resigned and investors awaited
testimony from U.S. Federal Reserve Chair Janet Yellen.
    Yellen's semi-annual testimony at the Senate Banking Panel
on Tuesday and Wednesday could offer clues to the pace of
interest rate increases. Interest rate futures show that
investors are pricing in about a 20 percent chance the Fed will
increase rates next month.
    "We don't think there'll be a rate hike in March because
it's unlikely the fiscal stimulus plan will be approved by then.
The Fed is in wait-and-see mode," said Simona Gambarini,
commodities economist at Capital Economics.
    "(This) uncertainty is going to drive gold for the next
couple of months."
    However, Gambarini added that rising inflation in the second
half of the year will force the Fed's hand before too long and  
  Dallas Fed President Robert Kaplan said on Monday that the Fed
should move soon to avoid falling behind the curve.             
    Gold is highly sensitive to climbing U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion while boosting the dollar, in which it is priced.
    Spot gold        was up 0.5 percent at $1,230.81 an ounce by
1246 GMT, while U.S. gold futures         gained 0.6 percent to
$1,232.50.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, rose 0.49 percent to 840.87
tonnes on Monday.          
    The dollar index was down 0.1 percent after Trump adviser
Flynn quit over revelations that he had discussed U.S. sanctions
against Moscow with the Russian ambassador before Trump took
office.
    "(This) will be a year littered with political and economic
minefields and we do not see a scenario where gold will
experience a major sell-off back to the late 2016/early 2017
lows," INTL FCStone analyst Edward Meir said.
    Gold has rallied nearly 10 percent since touching 10-month
lows in December.
    In other precious metals, spot silver        climbed 0.9
percent to $17.95, having hit its highest since Nov. 11 at $18
on Monday.
    Platinum        rose 0.7 percent to $1,003.80.
    "Platinum also saw noticeable ETF inflows of 8,900 ounces
yesterday," Commerzbank said in a note.
    Palladium        gained 0.6 percent to $779.30, down from a
two-week high hit on Monday.
    

 (Additional reporting by Arpan Varghese in Bengaluru; Editing
by Dale Hudson and David Goodman)
  

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