July 12, 2017 / 2:17 PM / in 3 years

PRECIOUS-Gold climbs as Yellen testimony curbs rate hike speculation

    * Yellen says no need for rates to rise much further
    * Dollar eases, bolstering gold
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices, market comment, milestones throughout; adds
byline, NEW YORK dateline)
    By Chris Prentice and Jan Harvey
    NEW YORK/LONDON, July 12 (Reuters) - Gold prices rose on
Wednesday, edging further from this week's near four-month low
after comments from Federal Reserve Chair Janet Yellen curbed
speculation that U.S. interest rates would rise more than once
this year.
    In congressional testimony, Yellen said that given current
estimates the Fed would not need to lift rates all that much
further to reach a neutral level that neither encourages nor
discourages economic activity.
    That weighed on the dollar        and U.S. Treasury yields,
helping lift gold further from Monday's trough of $1,204.45, the
weakest price since mid-March. 
    Spot gold        was 0.24 percent at $1,220.26 per ounce by
3:02 p.m. EDT (1902 GMT).
    The most-active U.S. gold         futures for August
delivery settled up $4.40 or 0.36 percent, at $1,219.1 per
ounce. Prices had rallied as much as 1.8 percent from Monday's
near four-month low of $1,204.
    "Gold reacts negatively to a rising interest rate
atmosphere, but there are limits to that," said James Steel, an
analyst at HSBC Securities (USA) Inc.
    Yellen's statements indicated that "tightening policies will
not necessarily be abrupt," Steel said.
    The dollar slipped and U.S. Treasury yields fell after
Yellen's comments in what may be one of her last appearances
before Congress.             
    The greenback        remained down against a basket of major
currencies for much of the session, which bolstered bullion. It
had edged higher by 2:55 p.m.
    Immediately after her statement, federal funds futures
implied traders saw a 53 percent chance the Fed would raise key
overnight borrowing costs at its December meeting, down from 60
percent beforehand, according to CME Group's FedWatch program.
    Gold is highly sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the greenback, in which it is priced.
    In the major physical markets, Commerzbank said in a note
that higher imports into No. 2 consumer India, reported the
previous day, could prove to be the last to show such strength
for a while.              
    "Indian gold traders are likely to have brought purchases
forward because a goods and services tax was introduced on gold
purchases in India on 1 July," it said. 
    Among other precious metals, silver       , which hit its
lowest since April last year during a flash crash on Friday at
$14.86, was 0.72 percent at $15.89. 
    Palladium        gained 1.53 percent at $862.98 an ounce.
Platinum        was up 1.33 percent at $912.99, recovering from
Tuesday's year-to-date low of $886.15 an ounce.

 (Reporting by Chris Prentice in New York and Jan Harvey in
London; additional reporting by Nithin Prasad and Arpan Varghese
in Bengaluru; Editing by David Evans and Tom Brown)
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