PRECIOUS-Gold eases as dollar, equities gain on China's attempt to resume work

Asha Sistla

work@ (Adds comments, details and updates prices)

* U.S. Fed Chair to begin testimony before Congress

* Chinese policymakers likely to roll out more stimulus

Feb 11 (Reuters) - Gold on Tuesday eased from a near one-week high hit in the previous session due to a stronger dollar and an uptick in equities as China's factories slowly return to work amid rising death toll from the coronavirus epidemic.

Spot gold edged lower by 0.2% to $1,568.11 per ounce by 0344 GMT. The metal touched its highest since Feb. 4 at $1,576.76 on Monday. U.S. gold futures fell 0.5% to $1,571.70.

Investors switched to the safety of the U.S. dollar and the Japanese yen as China reported 108 new deaths, taking the total death toll to 1,016, as doubts lingered about how quickly the country's factories could get back to work.

"The dollar index has been trending higher since late January and early February, that's one of the factors keeping a cap on gold prices," said ING analyst Warren Patterson, adding gold's trajectory would depend on how central banks respond to the economic impact of the virus.

"Do we see further easing as a result of the virus? If yes, then we'd see underpinned support for gold prices."

Asian shares bounced back, following through a record run in Wall Street. Chinese policymakers are expected to roll out more stimulus measures, including more fiscal spending and interest rate cuts.

In the United States, two Federal Reserve policy markers played down the impact of the virus on the domestic economy, with focus now on Fed Chair Jerome Powell's testimony before Congress.

Powell is expected to reiterate that the U.S. economy is doing well but that interest rates can stay low given subdued inflation.

Gold is highly sensitive to any reduction in interest rates, which decreases the opportunity cost of holding non-yielding bullion. Rate cuts also weigh on the dollar, in which gold is priced.

However, some analysts said the economic risks from the coronavirus could prompt a change in the Fed's stance.

"The nCoV adds to a growing list of economic growth concerns that could see the Fed shift into dovish gears later in 2020," said Stephen Innes, chief market strategist at AxiCorp, in a note, adding a dip in U.S. treasury yields was also "perceived support" for gold although the main driver would remain Fed policy.

Palladium rose 0.2% to $2,359.00 an ounce, silver shed 0.1% to $17.74, and platinum edged higher by 0.3% to $963.46. (Reporting by Asha Sistla in Bengaluru; Editing by Arun Koyyur)