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[SINGAPORE] Gold extended gains to a third session on Wednesday, boosted by weakness in the dollar and mixed US economic data that increased speculation that the Federal Reserve will not raise interest rates anytime soon.
Spot gold rose 0.2 per cent to US$1,195.60 an ounce by 0615 GMT, bringing it near the key US$1,200 level.
A variety of other factors, including a surge in oil prices and a slide in global equity markets, also supported demand for safe-haven bullion.
"The firm oil price and the widening US trade gap provided support for gold, with the key nonfarm payrolls this Friday likely to be the next major catalyst," said Jason Cerisola, a trader at MKS Group.
Higher oil prices - Brent hit a 2015 high on Wednesday - boost demand for gold, which is seen as a hedge against oil-led inflation.
Asian stocks stumbled to two-week lows on Wednesday in sympathy with weak US and European markets as investors were spooked by a vicious sell-off in sovereign bonds globally.
The dollar came under pressure as well after disappointing US trade data for March painted a bleaker economic picture of the first quarter.
Data on Tuesday showed the US trade deficit jumped 43.1 per cent to US$51.4 billion in March, the largest since October 2008. Other data showed activity in the services sector accelerated to a five-month high in April.
The sluggish data added to the view that the Fed will not raise interest rates at a policy meet in June, a factor that could boost demand for bullion, a non-interest-paying asset.
Fed officials have given conflicting signals this week on the possible timing of any rate increase, providing no clarity on the issue.
Investors are now awaiting the critical US nonfarm payrolls report on Friday to get a better read of the economy and how it could affect the timing of a rate hike.
In other industry news, China conducted trial runs for the planned launch of a yuan-denominated gold fix last month, three sources familiar with the matter said, in a sign the world's second-biggest bullion consumer was moving closer to creating a benchmark price.