* Bernanke delivers sombre assessment of U.S. economy
* Dollar extends losses vs euro after U.S. home sales data
* Eskom wins approval for SAfrican power tariff increase
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, Feb 24 (Reuters) - Gold recovered early losses on
Wednesday as the dollar weakened further against the euro after
Federal Reserve Chairman Ben Bernanke said economic conditions
will warrant low U.S. interest rates for an extended period.
The dollar also fell after data showed sales of new U.S.
homes fell sharply in January, with fresh doubts about the U.S.
economy leading investors to cut exposure to risk.
Spot gold <XAU=> was $1,100.45 at 1533 GMT, against
$1,102.95 late in New York on Tuesday. Earlier, the metal hit
its weakest since Feb. 12 at $1,089.45 an ounce after a break of
key resistance levels just below $1,100 an ounce prompted
selling.
"There has been a recovery in the euro, so gold is holding
the $1,100 level," said Deutsche Bank trader Michael Blumenroth.
"For the moment we are trading a broad range between $1,075 and
$1,125."
The dollar extended early losses against the euro on
Wednesday after Bernanke's testimony to Congress, and after data
showed a sharp drop in new home sales in January, lifting gold
prices back above $1,100 an ounce. []
Weakness in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
Bernanke offered a relatively downbeat assessment of the
U.S. economy in his first appearance before Congress following a
testy confirmation vote in the Senate last month, despite recent
signs of strong growth. []
U.S. stocks rose after Bernanke reaffirmed his commitment to
keeping interest rates low, while U.S. Treasuries erased modest
losses. []
Meanwhile the U.S. Commerce Department reported sales of
single-family homes fell 11.2 percent to a 309,000 unit annual
rate in January, the largest drop in a year and a record low.
[]
COMMODITIES SLIP
Among other commodities, oil was little changed and base
metals weakened as below-consensus 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 $15.90 versus $15.82 an ounce, platinum
<XPT=> at $1,505 an ounce versus $1,510, and palladium <XPD=> at
$424.50 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 for a 35 percent hike. []
South Africa is the world's biggest platinum producer and
one of the leading miners of palladium and 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 Amanda Cooper)
