Gold shines, ends higher as market cheers Yellen

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Gold settled more than 1 percent higher on Thursday, extending its gains into a second session after the nominee for Federal Reserve chairman, Janet Yellen, defended the central bank's bold steps to spur growth, suggesting the massive bond-buying stimulus will continue.

Answering questions before the Senate Banking Committee, Yellen made plain she would press forward with the Fed's ultra-easy monetary policy until officials were confident a durable economic recovery was in place that could sustain job creation.

"The possibility of continued tapering and Yellen's comment about the importance not to pull the plug too early is initially support of gold,'' said Thomas Power, senior commodity broker at futures brokerage RJO Futures.

"In the long run, I think it's somewhat bearish for gold prices as the equities are going to continue to rally off this news,'' Power said.

Chart: Precious Metals

Spot gold was last up 0.5 percent to $1,285 an ounce, after snapping a four-day losing streak on Wednesday with a gain of nearly 1 percent.

for December delivery settled 1.4 percent higher at $1,286.30 an ounce.

Another analyst said a resurgent dollar could also weigh down on gold prices.

"I expect the dollar to keep rising in the next few weeks and this rebound of gold to be temporary, because if the economy improves, the opportunity cost of holding gold would increase,'' Natixis analyst Bernard Dahdah said.

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By Reuters