Gold gains in Europe

Gold extended gains into a second session on Thursday after the nominee for US Federal Reserve chairman, Janet Yellen, suggested the central bank would continue with monetary stimulus measures. Yellen, in remarks prepared for her nomination hearing before the Senate Banking Committee later on Thursday, said the US jobless rate was still too high and that both the labour market and economy were performing "far short" of potential.
Spot gold was up 0.6 percent at $1,285.80 an ounce by 1442 GMT, after snapping a four-day losing streak on Wednesday with a gain of nearly 1 percent. US gold futures for December delivery advanced 0.9 percent to $1,279.80 an ounce. "The market has been reacting to Yellen's statement ...and it will be interesting to hear what she says in the Q&A session later today," Commerzbank analyst Daniel Briesemann said. "But gold's movements going forward will depend on the dollar and investment flows."
The dollar edged up 0.2 percent versus a basket of currencies. "I expect the dollar to keep rising in the next few weeks and this rebound of gold to be temporary, because if the economy improves, the opportunity cost of holding gold would increase," Natixis analyst Bernard Dahdah said. Yields on US 10-year Treasury bonds fell to 2.7 percent, compared with a near two-month high of 2.792 percent hit earlier in the week. In another gauge of investor sentiment, outflows from SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, resumed on Wednesday after pausing the previous two weeks.
Holdings in the fund fell 2.71 tonnes to a fresh four-year low of 865.71 tonnes. They had remained largely unchanged for most of November on uncertainty over the stimulus. Demand for the physical metal has picked up as gold trades below $1,300 an ounce but has not been strong enough to provide upward impetus to prices, traders said. The World Gold Council on Thursday cut its outlook for Indian demand in 2013 to around 900 tonnes from the 1,000 tonnes predicted previously as strict import rules introduced by New Delhi bite, while keeping its forecast for China unchanged at 1,000 tonnes. Silver rose 0.7 percent to $20.72 an ounce. Spot platinum was up 1.1 percent at $1,446.24 an ounce on continued supply disruptions in top world producer South Africa. Spot palladium rose 0.8 percent to $735.97 an ounce.