PRECIOUS-Gold Holds Gains, Awaits Bernanke for Direction

    

Markets are focused on Fed Chairman Ben Bernanke's semi-annual testimony to a U.S. Congressional panel later today for any clues on when it may start to taper its $85 billion monthly bond purchases.

    

FUNDAMENTALS

* Spot gold was little changed at $1,292.21 an ounce by 0821 GMT, hovering below a three-week high of $1,298.36 reached last Thursday. U.S. gold was up about $1 at $1,291.50.

    

* The metal rose 0.8 percent on Tuesday after the U.S. Labor Department said its Consumer Price Index increased 0.5 percent, the largest rise since February, increasing bullion's appeal as a hedge against inflation.

    

* Gold has swayed between sharp gains and losses over the last few weeks following mixed comments from the Fed about the likely timing of a scale-back in economic stimulus.

    

* The Fed should begin to reduce its massive bond-buying program and bring it to a close "sometime in the first half of next year," Kansas City Fed President Esther George said on Tuesday. 

    

* However, George also said should the U.S. economy grow faster than currently expected, it may be "appropriate" to reduce the bond-buying program at a faster pace.

    

* Cyprus said on Tuesday a sale of its gold reserves was not the only option under consideration to pay down its debt and that other alternatives were being considered. News that Cyprus could be forced to offload gold triggered a steep fall in the price of the metal in April as traders worried about the precedent it could set. 

    

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell to 937.57 tonnes on Tuesday, their lowest in four years. 

    

* Eldorado Gold Corp said on Tuesday it will cut 2013 capital spending by 35 percent and push back the start of various projects, making it the latest producer to curb spending in response to low gold prices. 

    

MARKET NEWS

* The dollar stayed on the defensive in early Asian trade on Wednesday as investors suffered a case of cold feet ahead of Bernanke's semi-annual testimony in Congress later in the day.

 

    

    DATA/EVENTS (GMT) 

    0200 China Foreign direct investment 

    1230 U.S. Building permits 

    1230 U.S. Housing starts 

    1400 Federal Reserve Chairman Ben Bernanke delivers semiannual testimony before Congress committee 

    1800 U.S. Federal Reserve Beige Book

    

  Precious metals prices 0021 GMT

  Metal             Last    Change  Pct chg  YTD pct chg    Volume

  Spot Gold        1292.21    0.22   +0.02    -22.83

  Spot Silver        19.95   -0.03   -0.15    -34.11

  Spot Platinum    1419.24   -4.26   -0.30     -7.54

  Spot Palladium    731.97   -1.53   -0.21      5.78

  COMEX GOLD AUG3  1291.50    1.10   +0.09    -22.93         2529

  COMEX SILVER SEP3  19.96    0.02   +0.10    -34.15          338

  Euro/Dollar       1.3146

  Dollar/Yen         99.13

 

  COMEX gold and silver contracts show the most active months