Gold extends gains on sluggish U.S. data, dollar

SINGAPORE (Reuters) - Gold extended gains to a third session on Wednesday, boosted by weakness in the dollar and more mixed U.S. economic data that added to speculation the Federal Reserve will not raise interest rates soon.

FUNDAMENTALS

* Spot gold was steady at $1,193.86 an ounce by 0034 GMT. The metal climbed to a session high of $1,199.60 on Tuesday.

* The dollar came under pressure after disappointing U.S. trade data for March painted an even bleaker economic picture of the first quarter.

* Data on Tuesday showed U.S. trade deficit jumped 43.1 percent to $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 trade data spooked equity markets as well, increasing safe-haven bids for gold.

* The sluggish data added to speculation the Fed will not raise interest rates at its next policy meet in June, a factor that could boost demand for bullion, a non-interest-paying asset.

* Investors are now awaiting the critical U.S. nonfarm payrolls report on Friday to get a better read of the economy and how it could affect the timing of a rate hike.

* The Fed should not raise interest rates until at least next year, Minneapolis Federal Reserve Bank President Narayana Kocherlakota said on Tuesday, adding inflation is expected to remain below the Fed's 2 percent annual target for several years.

* In other industry news, volumes in the global spot gold market have fallen to their lowest in a year, with shrinking liquidity and a slowdown in interbank trade making customers reluctant to transact on a large scale.

* Kinross Gold is scouting for acquisition opportunities but vows it will be disciplined and only strike a deal if it offers value to shareholders, the Canadian gold miner's chief executive said on Tuesday.

(Reporting by A. Ananthalakshmi; Editing by Michael Perry)