* Gold retreats after Tuesday's 1.7 pct gain
* Fed Chair Yellen urges caution on rate hikes
* Traders await U.S. jobs data on Friday for more cues
(Updates prices, adds comment)
By Devika Krishna Kumar and Jan Harvey
NEW YORK/LONDON, March 30 (Reuters) - Gold fell more than 1
percent on Wednesday as a rally in assets seen as higher risk,
such as equities, prompted some investors to cash in gains
sparked the previous day by Fed chair Janet Yellen's cautious
tone on further rate hikes.
Yellen's comments, which had sent gold up nearly 2 percent,
signaled interest rates will likely rise only gradually and
reassured gold investors, as higher rates boost the opportunity
cost of holding non-yielding assets like bullion.
The metal remains on track for its best quarter in nearly 30
years, up 15.6 percent, after prices rallied sharply earlier in
the year as worries about economic growth, particularly in
China, shook up stock markets.
Consequent demand for safe havens, combined with receding
expectations for U.S. Federal Reserve rate hikes, have driven
gold up more than 16 percent since January, making this its
strongest quarter so far since the third quarter of 1986.
Spot gold XAU= was at $1,227.14 an ounce by 2:48 p.m. EDT
(1848 GMT), down 1.2 percent. U.S. gold futures GCv1 settled
down $8.90 an ounce at $1,228.60.
"Safe-haven demand for gold appears to be easing, despite a
somewhat softer U.S. dollar," said Rob Haworth, senior
investment strategist at U.S. Bank Wealth Management.
"Prices are likely to remain range bound since we expect the
Fed to ultimately increase rates at the June meeting, which
should lead to a stronger U.S. dollar and weaken demand for
gold."
World stocks climbed near the highest levels this year on
Wednesday as investors rolled back expectations for how fast and
how far U.S. interest rates might rise. MKTS/GLOB
While in the near term analysts say the market's focus will
be on the pace of improvement in U.S. economic data, with an
improvement likely to dent demand for gold, stronger support for
gold could emerge if non-U.S. economic data worsens.
Holdings of the world's biggest gold-backed exchange-traded
fund, SPDR Gold Shares GLD , declined for the first day in two
weeks on Tuesday, by 3.3 tonnes. GOL/ETF
The market is now keenly awaiting the main U.S. jobs data
later this week.
"Though the rally looks intact it can be dented by a good
employment number in the non-farm payrolls release for March
scheduled for Friday," HSBC said in a note. "A number above
200,000 new net jobs could wear on gold and clip recent gains."
Among other precious metals, silver XAG= was down 0.6
percent at $15.24 an ounce, platinum XPT= was down 0.2 percent
at $965.11 an ounce and palladium XPD= was down 2 percent at
$562.22 an ounce.
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GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
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