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LONDON — Gold steadied below $1,300 an ounce after two days of losses yesterday, still trading near a four-week low on a stronger dollar and fears the Federal Reserve could hike US interest rates sooner than expected.Fed chair Janet Yellen said on Tuesday the US central bank could raise rates earlier or faster if hiring and wages took off in an unexpected way, though she signalled that the Fed would keep monetary policy loose until jobs data showed the effects of the financial crisis were “completely gone”.

Spot gold rose 0,3 percent to $1,297.74 an ounce by 10.19 GMT, after losing 3,3 percent in the last two sessions, its biggest two-day loss since October. The metal broke below $1,300 for the first time since June 19 in the previous session following Yellen’s testimony to the US Senate.

“Yellen’s remarks this week are triggering an upward adjustment in expectations for the future path of Fed rate hikes, a higher US dollar, constructive investor sentiment and lower gold prices,” ABN Amro analyst Georgette Beoele said.

“At best, we’ll see prices consolidating at these levels but if more good economic data comes in or the market gets more nervous about expectations for higher interest rates, we’ll see further downside.”

The dollar was up 0,1 percent versus a basket of currencies, while European shares also rose, buoyed by strength in miners after Chinese growth slightly beat expectations.

Recent economic data from the US has indicated that the economy was on the path to recovery.

A strengthening US economy and job market means the Fed should begin raising interest rates “relatively soon”, Kansas City Federal Reserve Bank President Esther George said on Tuesday.

Higher interest rates would encourage investors to switch to assets that, unlike gold, pay interest.

Ms George said by many measures, including a recent rise in rent and food prices, and strong hiring reports, the Fed should have already lifted interest rates from the zero level.

The market will continue to watch Yellen’s congressional testimony yesterday.

“Despite Yellen defending the Fed’s stance to maintain loose monetary policies, the bullion markets seemed to interpret her comments for the possibility of an earlier than an anticipated rate hike as gold-bearish,” HSBC analysts said in a note.

“With the break below $1,300/oz and technical weakness, further losses for gold are likely.”

Traders said gold could have further to fall, especially as this week’s $40 drop had failed to generate a robust pickup in physical demand in Asia.

“I don’t see any new positions created at this level or any fresh buying in the physical markets,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

“Prices will see some range-trading now and could consolidate at $1,280-90.”

In China, the top consumer of gold, local premiums edged up to $1 an ounce on the Shanghai Gold Exchange from a small discount in the previous session.

Platinum rose by 0,1percent to $1,481.00 an ounce, while palladium was up by the same margin at $866,25 an ounce and silver gained 0,2 percent to $20.71 an ounce.-Reuters