Gold extends gains as Middle East turmoil lifts appeal

Gold prices climbed for a third straight session on Monday, as bullion held onto safe-haven gains from elevated tensions in the Middle East and after U.S. producer prices data last week renewed bets for an early rate cut by the Federal Reserve.

FUNDAMENTALS
* Spot gold was up 0.3% at $2,054.73 per ounce, as of 0228 GMT, after marking its biggest daily gain since Dec. 12 on Friday.


* U.S. gold futures rose 0.4% to $2,058.70. * The war between Israel and Hamas reached its 100th day as Israel continued its fierce offensive, while Houthi militia threatening a response to U.S. air strikes on Yemen kept risks of escalations in the Middle East elevated.

* Gold, historically seen as a safe store of wealth, tends to gain during times of political and economical uncertainty.

* Bets for a Fed cut in March gathered some steam after data on Friday showed U.S. producer prices unexpectedly fell in December, sending Treasury yields sliding in response.

* The U.S. Fed is expected to hold its policy rate steady at the Jan. 30-31 meeting. Financial markets see a 79% chance that rate cuts will begin in March.

* Overall, traders are betting on 166 basis points (bps) of Fed rate cuts this year, higher than Friday morning's bets of 150 bps, according to LSEG's interest rate probability app, IRPR.

* Lower interest rates increase non-yielding bullion's appeal.

* However, Atlanta Federal Reserve President Raphael Bostic said inflation could "see-saw" if policymakers cut interest rates too soon.

* The dollar index eased 0.1% against a basket of currencies, increasing bullion's appeal for other currency holders.

* COMEX gold speculators cut their net long position by 31,228 contracts to 106,288 in the week ended Jan. 9 , data showed on Friday.

* Spot silver rose 0.5% to $23.29 per ounce, platinum climbed 0.9% to $913.45, and palladium gained 0.7% to $982.38. DATA/EVENTS (GMT) 0630 India WPI Inflation YY Dec 1000 Euro Zone Total Trade Balance Nov 1100 Euro Zone Reserve Assets Total Dec 1330 Canada Manufacturing Sales MM Nov 2350 Japan Corp Goods Prices MM, YY Dec (Reporting by Harshit Verma in Bengaluru; Editing by Sherry Jacob-Phillips)