* Gold tracks euro higher, gains capped
* Investors await Bernanke's testimony this week
(Updates prices)
By Lewa Pardomuan
SINGAPORE, Feb 23 (Reuters) - Gold tracked the euro higher
on Tuesday but stayed below a 1-month high hit the previous day
as uncertainty about the timing and pace of monetary tightening
in the United States drove off some investors.
Trading was lacklustre before this week's testimony from
the head of the U.S. Federal Reserve, which could set the tone
for the dollar, and a steady flow of gold scrap into the
physical market in Asia could also cap gains, dealers said.
Spot gold <XAU=> hit an intraday high of $1,116.85 and was
at $1,114.59 an ounce by 0631 GMT, slightly higher than New
York's notional close. Bullion rallied to its strongest in a
month at $1,130.65 on Monday before profit-taking kicked in.
Gold has rebounded from a 3-month low as investors sought a
safe haven from currency volatility, but it is still struggling
to sustain recent gains. Bullion was about 7 percent below a
lifetime high around $1,200 struck in early December.
"We think there is still scope for the dollar to rally
further on the back of uncertainties in Greece," said David
Barclay, commodity strategist at Standard Chartered in Hong
Kong.
"But given that gold has recently been resilient to dollar
strength and that correlations between the two have weakened,
this bodes well for gold if the dollar does bounce a little
further." The dollar consolidated on Tuesday with traders on
the sidelines on speculation the Fed would hose down talk of
early monetary tightening, while the euro bounced despite
concerns about Greece's indebtedness. []
San Francisco Federal Reserve Bank President Janet Yellen
said the U.S. economy still needed extraordinary low interest
rates as inflation was "undesirably low", a view that could be
echoed by Fed Reserve chief Ben Bernanke in coming days.
Bernanke gives testimony to Congress on Wednesday and
Thursday.
"In the second half of the year we are forecasting a return
to the bearish trend in the dollar. Coupled with low real rates
and higher oil prices, that's why we still see gold averaging
$1,300 an ounce by Q4," said Barclay of Standard Chartered.
U.S. gold futures for April delivery <GCJO> added $2.3 an
ounce to $1,115.4 an ounce but it also hovered below Monday's
1-month high, with weaker oil prices likely to put a lid on
gains.
Dealers expected spot gold and U.S. future to trade in a
narrow range of $1,100 and $1,130 this week.
"The euro is edging higher, so that's why gold is also up,"
said a dealer in Singapore.
"But trading is a bit mixed here. I mean we receive gold
scrap but at the same time we also see physical demand," said
the dealer, referring to purchases from jewellers.
Oil fell from six-week highs to trade around $80 on Tuesday
as forecasts for higher U.S. crude and gasoline stockpiles
offset concerns that a strike at Total's French refineries
would trigger fuel shortages. []
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,107.901 tonnes
as of Feb. 22, up 0.305 tonnes from the previous business day.
[]
PRICES
Precious metals prices at 0631 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1114.59 0.99 +0.09 1.72
Spot Silver 16.24 0.04 +0.25 -3.51
Spot Platinum 1531.00 9.50 +0.62 4.36
Spot Palladium 435.50 -4.50 -1.02 7.40
TOCOM Gold 3274.00 -50.00 -1.50 0.46 51200
TOCOM Platinum 4492.00 -37.00 -0.82 2.53
11506 TOCOM Silver 48.50 -0.80 -1.62 -6.19
456 TOCOM Palladium 1278.00 -21.00 -1.62 9.70
276 Euro/Dollar 1.3622
Dollar/Yen 91.07
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Ed Lane)
