Gold holds close to 7-week high on safe-haven demand

SINGAPORE (Reuters) - Gold was trading close to a seven-week peak on Wednesday, boosted by safe-haven bids as the dollar weakened on cautious comments by U.S. Federal Reserve officials regarding a rate hike and on political uncertainty in Greece.

FUNDAMENTALS

* Spot gold had eased 0.2 percent to $1,228.18 an ounce by 0051 GMT. The metal jumped to $1,238.70 in the previous session, its highest since Oct. 23, before closing up 2 percent.

* The dollar index slipped for a third day in a row after concerns over the timing of higher U.S. interest rates.

* Dennis Lockhart, head of the Atlanta Federal Reserve, said he was in no rush to drop the Fed's pledge to keep interest rates near zero for a "considerable time", while San Francisco Fed chief John Williams said the phrase was still appropriate.

* Recent strong U.S. economic data had prompted investors to believe a rate hike could come soon.

* As a non-interest-bearing asset, gold would have taken a hit from higher rates, but the comments from Fed officials helped calm investor nerves.

* European political woes also hurt the greenback and equities. Greek shares and sovereign bond markets plunged on Tuesday after the government in Athens brought forward a presidential vote that heightened uncertainty over the country's transition out of its IMF/EU bailout.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.37 percent to 721.81 tonnes on Tuesday, another factor that could boost prices.

* In the physical markets, strong investor demand lifted American Eagle Silver Bullion coin sales to a record for the second straight year, the U.S. Mint said on Tuesday.

* India will announce changes as early as this week to a rule mandating so-called star trading houses export 100 percent of their gold imports, a policy maker with direct knowledge of the upcoming action said on Tuesday.

* India should allow banks to use gold as part of their liquidity reserves, which would let them make more use of gold inside the country and reduce the need for imports, an industry body said on Tuesday, seeing that as an alternative to import curbs.

(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)