PRECIOUS-Gold falls to 2010 low after Yellen's upbeat comments, dollar jumps

* Upbeat comments by Fed's Yellen push dollar higher
* Beige Book shows U.S. labor market tightened modestly
* Traders await ECB on Thursday, U.S. payrolls on Friday

(Rewrites throughout, updates prices; adds comment, second
byline, NEW YORK dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, Dec 2 (Reuters) - Gold fell to its lowest
in nearly six years on Wednesday, extending losses as Federal
Reserve Chair Janet Yellen said she was "looking forward" to an
interest rate hike that will mark the U.S. economy's recovery
from recession.
In prepared remarks, Yellen did not indicate if she still
expected a rate hike would be warranted at the Fed's last
remaining policy meeting this year on Dec. 15-16.
Her comments lifted the U.S. dollar to its highest against
the euro in more than seven months. USD/
Bullion prices slightly pared losses when the Fed later said
in its Beige Book report that the U.S. labor market tightened
modestly in recent weeks with some upward pressure on wages and
that U.S. economic activity continued to expand at a modest pace
in most regions.
Spot gold XAU= was down 1.4 percent at $1,053.70 an ounce
at 3:25 p.m. EST (2025 GMT), having fallen to the lowest since
February 2010 at $1,050.25. U.S. gold futures GCcv1 for
February delivery settled down 0.9 percent at $1,053.80 an ounce
after falling to the lowest since October 2009 at $1,049.40.
Prices have been pressured by expectations that the Fed will
raise rates for the first time in nearly a decade this month,
even as the European Central Bank is expected to ease policy
further at a Thursday meeting.
Rising rates would lift the opportunity cost of holding
non-yielding gold, while boosting the dollar.
"Janet Yellen suggested that the economy continues to grow
at a moderate pace, but evidence from the Beige Book indicates a
slightly softer trend," said Andrew Grantham, senior economist
and director of CIBC Economics, in a note.
The Fed has tied the timing of its rate hiking cycle to the
strength of economic data, making Friday's U.S. payrolls report
particularly important.
Gold prices were already pressured by data showing U.S.
private employers added a greater than expected 217,000 jobs in
November.
"Essentially the ECB and Friday's nonfarm payrolls look
quite negative for precious metals, given the likelihood of
further strengthening of the dollar on the back of potential
quantitative easing in the euro zone, and further U.S. jobs
growth," Mitsubishi analyst Jonathan Butler said.
"But as always, precious could jump higher if those
expectations are disappointed."
Silver XAG= was down 1.1 percent at $14.04 an ounce, while
platinum XPT= was down 0.8 percent at $831.74 an ounce and
palladium XPD= was down 1.9 percent at $528.15 an ounce.

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