* Yellen says no need for rates to rise much further
* Dollar eases, bolstering gold
* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl (Updates prices, market comment, milestones throughout; adds byline, NEW YORK dateline)
By Chris Prentice and Jan Harvey
NEW YORK/LONDON, July 12 (Reuters) - Gold prices rose on Wednesday, edging further from this week's near four-month low after comments from Federal Reserve Chair Janet Yellen curbed speculation that U.S. interest rates would rise more than once this year.
In congressional testimony, Yellen said that given current estimates the Fed would not need to lift rates all that much further to reach a neutral level that neither encourages nor discourages economic activity.
That weighed on the dollar .DXY and U.S. Treasury yields, helping lift gold further from Monday's trough of $1,204.45, the weakest price since mid-March.
Spot gold XAU= was 0.24 percent at $1,220.26 per ounce by 3:02 p.m. EDT (1902 GMT).
The most-active U.S. gold GCcv1 futures for August delivery settled up $4.40 or 0.36 percent, at $1,219.1 per ounce. Prices had rallied as much as 1.8 percent from Monday's near four-month low of $1,204.
"Gold reacts negatively to a rising interest rate atmosphere, but there are limits to that," said James Steel, an analyst at HSBC Securities (USA) Inc.
Yellen's statements indicated that "tightening policies will not necessarily be abrupt," Steel said.
The dollar slipped and U.S. Treasury yields fell after Yellen's comments in what may be one of her last appearances before Congress. greenback .DXY remained down against a basket of major currencies for much of the session, which bolstered bullion. It had edged higher by 2:55 p.m.
Immediately after her statement, federal funds futures implied traders saw a 53 percent chance the Fed would raise key overnight borrowing costs at its December meeting, down from 60 percent beforehand, according to CME Group's (NASDAQ:CME) FedWatch program.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback, in which it is priced.
In the major physical markets, Commerzbank (DE:CBKG) said in a note that higher imports into No. 2 consumer India, reported the previous day, could prove to be the last to show such strength for a while. gold traders are likely to have brought purchases forward because a goods and services tax was introduced on gold purchases in India on 1 July," it said.
Among other precious metals, silver XAG= , which hit its lowest since April last year during a flash crash on Friday at $14.86, was 0.72 percent at $15.89.
Palladium XPD= gained 1.53 percent at $862.98 an ounce. Platinum XPT= was up 1.33 percent at $912.99, recovering from Tuesday's year-to-date low of $886.15 an ounce.