Gold bounces off 7-week low as Yellen flags flexibility

SINGAPORE (Reuters) - Gold edged higher on Wednesday after dropping to a seven-week low the session before, with Federal Reserve Chair Janet Yellen indicating flexibility in raising U.S. interest rates.

Yellen said on Tuesday that while the Fed is preparing to consider rate hikes on a "meeting-by-meeting basis", an increase is not likely for at least the next couple of meetings.

FUNDAMENTALS

* Spot gold was up half a percent at $1,206 an ounce by 0021 GMT, after hitting its weakest since Jan. 5 on Tuesday at $1,190.91.

* U.S. gold for April delivery gained 0.8 percent to $1,206.30 an ounce. Silver, both spot and futures , rose more than 1 percent.

* A U.S. rate hike, the first since 2006, reduces the appeal of non-interest bearing assets such as gold. Yellen's comments before a Senate Banking Committee suggest that the U.S. central bank appears largely on track to increase interest rates by midyear as many in the market expect.

* In remarks to the committee, Yellen described how the Fed's rate-setting policy committee will likely proceed in coming months - first by removing the word "patient" in describing its approach to rate hikes, then entering a phase in which rate hikes are possible at any meeting.

* Chinese financial markets reopen after a week-long Lunar New Year holiday, and could provide further support to gold prices.

* Greece secured a four-month extension of its financial rescue when its euro zone partners approved a reform plan that backed down on key leftist measures and promised that spending to alleviate social distress would not derail its budget.

* Switzerland's competition commission WEKO is looking into possible manipulation of price fixing in the precious metals market.

* The U.S. Department of Justice and the Commodity Futures Trading Commission are investigating at least 10 major banks for possible rigging of precious-metals markets, the Wall Street Journal reported, citing people close to the inquiries.

* Indian police said they had made the single biggest seizure of gold smuggled into the country after arresting six people leaving an airport with 60 kg of the precious metal flown in from Dubai.

* For the top stories on metals and other news, click [TOP/MTL] or [GOL/]

MARKET NEWS

* Asian shares rose, tracking gains on Wall Street, after Yellen said it would be several months before the Fed expects to boost interest rates. [MKTS/GLOB]

(Reporting by Manolo Serapio Jr.; Editing by Joseph Radford)