* Gold hits 3-mth high, dollar eases ahead of Yellen testimony
* Investors wager on dovish tone, even if tapering affirmed
* Most Asian shares subdued, Australia outperforms on upbeat data
The U.S. dollar eased and gold prices hit a three-month high on Tuesday as investors anticipated the new head of the U.S. Federal Reserve's outlook for the economy and policy would do nothing to rock the boat for markets.
Fed Chair Janet Yellen gives her first testimony before the House Financial Services Committee at 1500 GMT, and will likely face questions on the state of the labour market and the future pace of tapering.
Dealers said the latest betting was that while the tone was likely to be upbeat on the economy, Yellen would emphasise that rates were set to remain near zero for an extended period.
Just the hope was enough to lift gold as much as 0.6 percent to $1,283.66 an ounce, while the dollar lost a quarter of a cent to the euro at $1.3665.
The dollar also dipped a touch to 102.10 yen though activity was curtailed by a holiday in Japan.
The sharpest move came in the Australian dollar which tacked on half a cent to $0.9005 after figures showed a broad improvement in business activity combined with a near 10 percent annual increase in home prices.
The local share market was further underpinned by a solid earnings report from Australia and New Zealand Banking Group and added 0.5 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent, even as most of the main bourses in the region were subdued on the day.
Wall Street had also been in a cautious mood, with the Dow up just 0.05 percent on Monday, while the S&P 500 added 0.16 percent.
Still, share values have been supported by solid earnings. With about 69 percent of the S&P 500 having reported, 68 percent have topped profit expectations, above the long-term average.
Yellen appears before the Republican-controlled House of Representatives Financial Services Committee on Tuesday and the Democrat-controlled Senate Banking Committee on Thursday.
Analysts generally assume Yellen will stick with the script and reiterate that the Fed will continue to scale back its asset buying, as long as the economy improves as expected.
"The testimony is likely to be more theatre than economics," said Marshall Gittler, head of global FX strategy at online trader IronFx Global.
"Yellen will probably try to remain polite and give upbeat, optimistic answers that will play well on TV. In that respect her testimony may present a favourable picture of the U.S. economy that could boost the dollar."
One argument for staying the course on tapering is that bond investors have learned to live with the idea without freaking out, as they did a couple of times last year.
Yields on U.S. 10-year Treasury paper have settled back at 2.67 percent, well below recent highs of 3.04 percent and less of a threat to the housing market.
Investors, too, have accepted that tapering is not the same as tightening and have pushed out the timing of the first actual hike in the Fed funds rate. A move is not fully priced in until late 2015 , a view Yellen is likely to endorse.
In oil markets, prices steadied after recent gains as the market looked toward the end of a long and frigid winter.
Brent was up 5 cents on Tuesday at $108.68 a barrel but off a five-week high above $109. U.S. crude inched up 2 cents to $100.08, after rising to its highest this year on Monday at $100.55.