* Technical selling accelerates price dip below $1,100/oz
* Traders await congressional testimony from Fed chair
* Dollar holds gains versus currency basket after U.S. data
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 24 (Reuters) - Gold fell more than 1 percent to
$1,089.45 an ounce as a price slip below $1,100 sparked
technical selling, and amid caution ahead of Federal Reserve
chair Ben Bernanke's congressional testimony later on Wednesday.
Prices hit their weakest since Feb. 12 after they broke
resistance at $1,100 an ounce, prompting automated selling. Spot
gold <XAU=> was at $1,093.65 an ounce at 1219 GMT, against
$1,102.95 late in New York on Tuesday.
Ole Hansen, senior manager at Saxo Bank, said the precious
metal was reacting to a retreat in risk appetite, and to
unfavourable technical factors.
"We are back below $1,100 an ounce. That's a technical level
we managed to bounce from a couple of times last week, we are
now through and we have to find support once again," he said.
"The (next) level is around the $1,073 area."
U.S. gold futures for April delivery <GCJ0> on the COMEX
division of the New York Mercantile Exchange slipped $10.30 to
$1,092.40 an ounce.
The dollar held broad gains on Wednesday after weak U.S.
consumer confidence data the previous day stung risk appetite.
The euro however climbed against the U.S. currency. []
Currency traders awaited Ben Bernanke's congressional
testimony, due to begin at 1500 GMT, for clues as to the future
direction of the foreign exchange markets.
Bernanke's testimony was likely to touch on financial
regulation and questions over the central bank's evolving
strategy to remove unprecedented monetary stimulus from the
financial system. []
"If, as we suspect, he maintains the clear stance to a loose
monetary policy, the market will buy dollars on the hoped-for
support this will give the economy," Credit Agricole CIB said in
a note.
"If he signals that the exit strategy is picking up pace,
either the prospect of higher yields will bolster the dollar, or
a nervous market, post the consumer confidence figure, will
worry about activity and swing toward the dollar.
"Hence, without a clear mood change it looks like heads I
win and tails you lose as far as the dollar is concerned."
COMMODITIES SLIP
Among other commodities, oil gave up early gains to decline
and base metals weakened as weak U.S. consumer confidence data
released on Tuesday continued to blunt appetite for assets
perceived as higher risk. [] []
A drop in bullion prices spurred some buying in parts of
Asia, but main consumer India was on the sidelines. A lack of
activity in China after the Lunar New Year holidays also put
pressure on premiums. []
The China Daily reported on Wednesday, citing an unnamed
official from the China Gold Association, that China was
unlikely to buy 191.3 tonnes of gold being offered for sale by
the International Monetary Fund. []
Silver <XAG=> was at $15.70 an ounce versus $15.82, platinum
<XPT=> at $1,498.50 an ounce versus $1,510, and palladium <XPD=>
at $426 against $428.50.
South Africa's power regulator on Wednesday granted
state-owned utility Eskom a 24.8 percent tariff increase for the
2010-11 financial year, falling short of the power firm's
request of a 35 percent hike. []
The republic is the world's biggest platinum producer and
one of the leading miners of palladium amd gold.
"(This) will make mining in South Africa a bit more
expensive, but in the long run it will make it more reliable as
well," said one European platinum group metals trader.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
