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

A. Ananthalakshmi
Monday, 10 Feb 2014 | 11:05 PM ET

* Spot gold gains 1 pct to highest since mid-November U.S. gold futures in longest winning streak since August 2012

* Coming up: Fed Chair Janet Yellen House testimony 1500 GMT

(Adds analyst's comments, updates prices) SINGAPORE, Feb 11 (Reuters) - Spot gold climbed to its highest in nearly three months on Tuesday ahead of Congressional testimony by the new chief of the Federal Reserve, on hopes that the U.S. central bank may slow the pace of its stimulus tapering. U.S. gold futures rose 1 percent, gaining for a fifth day in a row in its 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 currencies. 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 hoping 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 0.7 percent $1,283.76 an ounce by 0323 GMT, after gaining 1.4 percent in the past two sessions. It rose as much as 1 percent to $1,287.01 earlier in the session - its highest since mid-November. U.S. gold futures for April delivery rose as much as 1 percent to $1,287.50 - also its highest level in almost three months. 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 gained 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 $8.50 an ounce from $12 on Monday.

PRICES AT 0323 GMT

Metal Last Change Pct chg Spot gold 1283.76 9.47 0.74 Spot silver 20.11 0.08 0.4 Spot platinum 1387.99 6.74 0.49 Spot palladium 716.75 2 0.28 Comex gold 1283.9 9.2 0.72 Comex silver 20.135 0.023 0.11 Euro 1.3665 DXY 80.558

COMEX gold and silver contracts show the most active months

(Editing by Richard Pullin and Muralikumar Anantharaman)