Gold gains as U.S. dollar, yields pull back before Powell testimony

(Adds comments, details, and updates prices)

* Investors await U.S. CPI data due on Wednesday

* U.S. 10-yr Treasury yield inches away from 2-year high

Jan 11 (Reuters) – Gold prices gained for a third straight
session on Tuesday, as the dollar and Treasury yields retreated
ahead of the Federal Reserve Chair Jerome Powell’s nomination
hearing as bets for quicker U.S. interest rate hikes grow.

Spot gold rose 0.3% to $1,805.87 per ounce by 1027
GMT. U.S. gold futures rose 0.4% to $1,806.10.

“Declining bond yields and a weaker U.S. dollar are pushing
up gold prices above $1,800 this morning,” said Carsten Fritsch,
a commodities analyst at Commerzbank.

The yield on 10-year Treasury notes backed off
an almost two-year high and the U.S. dollar was lower against
major peers.

Powell pledged “to prevent higher inflation from becoming
entrenched” in comments prepared for delivery at his nomination
hearing before the Senate Banking Committee for a second
four-year term as head of the Fed on Tuesday.

“The manner in which Mr. Powell responds to these questions
could hint at the ‘hawkishness’ of the Fed and consequently give
markets some directional bias going forward,” said DailyFX
analyst Warren Venketas.

Focus then turns towards the U.S. core CPI data on Wednesday
that is expected to have risen by an annual 5.4% in December, up
from 4.9% in the prior month.

“An estimate beat could increase markets rate hike
expectations and cement the much talked about 4th rate hike for
2022. Again, this should weaken gold prices,” Venketas added.

Gold is considered a hedge against high inflation, but the
metal is highly sensitive to rising U.S. interest rates which
increase the opportunity cost of holding non-yielding bullion.

Spot silver rose 0.3% to $22.51 an ounce, platinum
was little changed at $940.03, and palladium rose
0.9% to $1,929.06.
(Reporting by Seher Dareen in Bengaluru; editing by David
Evans)