Gold rises as Italy vote uncertainty boosts safe-haven appeal

SINGAPORE Tue Feb 26, 2013 6:42am IST

A craftsman makes a gold ornament in Qionghai, Hainan province, February 21, 2013. REUTERS/China Daily

A craftsman makes a gold ornament in Qionghai, Hainan province, February 21, 2013.

Credit: Reuters/China Daily

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SINGAPORE (Reuters) - Spot gold inched up on Tuesday, extending gains from the previous session as uncertainty over Italy's election results stoked fears of a resurgent euro zone debt crisis, boosting bullion's appeal as a safe-haven investment.

FUNDAMENTALS

* Spot gold had edged up 0.1 percent to $1,595.41 an ounce by 0034 GMT, extending gains into the fourth straight session.

* U.S. gold was up half a percent at $1,595.10.

* Election projections show that no party is likely to win a majority in the upper house of Italy's Senate, fuelling worries about revived political uncertainty in the euro zone's third-largest economy, which could reignite the debt crisis.

* Investors will closely watch U.S. Federal Reserve Chairman Ben Bernanke's testimony to Congress on Tuesday and Wednesday, to seek clues on the Fed's attitude on its monetary policy.

* Likely government budget cuts and the prospect for messy political fights over fiscal policy will weigh on the U.S. economy this year and hold growth to a tepid 2.4 percent, according to a survey of forecasters published on Monday.

* Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 7.83 tonnes, or 0.61 percent, to 1,272.848 tonnes on Feb 25, the lowest since August 2012.

MARKET NEWS

* U.S. stocks on Monday suffered their biggest drop since November after the strong showing in Italian elections by groups opposed to the country's economic reforms.

* The euro crouched near a six-week low against the dollar while the yen kept some distance from multi-month lows on Tuesday. <USD/>

(Reporting by Rujun Shen; Editing by Joseph Radford)

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