* Italy election sparks fear about political chaos
* Platinum prices at first discount to gold in a month
* SPDR Gold Trust reports fourth straight daily outflow
* Coming up: Fed chief Bernanke starts testimony to Congress (Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Feb 26 (Reuters) - Gold rose on Tuesday as a deadlock in the Italian elections sparked demand for bullion as a haven from risk, but gains were capped as traders awaited testimony from Federal Reserve chief Ben Bernanke later in the day.
European shares slid 1.2 percent and the dollar and safe-haven German bunds climbed after an inconclusive vote left Italy facing political stalemate and rekindled fears of a new euro zone debt crisis.
Although gold has tended to trend in line with stocks and against the dollar this year, it also rose as it recovered some haven appeal in its own right.
Spot gold was up 0.25 percent at $1,597.66 an ounce at 1018 GMT, while U.S. gold futures for April delivery were up $10.70 an ounce at $1,597.30.
"(Gold) seems to have rekindled its safe haven qualities a bit here," Saxo Bank vice president Ole Hansen said. "But whether it will last for long probably depends on Bernanke this afternoon."
"On average, I would think his statement will be gold supportive as an offset from the recent (Fed) meetings," he said. "I'm looking for 1,605, followed by 1,620-25, as major levels of resistance."
He said the drop in equities was unlikely to hurt gold in this case, given that is was driven by elevated risk aversion.
Italy faced political turmoil on Tuesday after a stunning election that saw the anti-establishment 5-Star Movement of comic Beppe Grillo become the strongest party in the country, but left no group with a clear majority in parliament.
Former prime minister Silvio Berlusconi indicated his centre-right might be open to a grand coalition with the centre-left bloc of Pier Luigi Bersani, which will have a majority in the lower house due to a premium of seats given to the largest bloc in the chamber.
"(The) Italian elections have been the first of the 2013 scheduled event risks to blow a hole in risk appetite. That the anti-establishment 5 Star movement was the party to win the single largest share of the vote proves a sharp reminder to Brussels that fiscal austerity can potentially be undone with a popular vote," Dutch bank ING said in a note.
"The lack of a clear winner in Italy and the unlikely return of a national solidarity government... should demand a higher risk premium of euro zone assets and some safe-haven support to the dollar."
Traders are gearing up for the first of two days of Fed chairman Ben Bernanke's congressional testimony, which will heavily scrutinise the Fed's controversial bond-buying programme and gauge his confidence in the resilience of the U.S. economy.
"Any rally (in gold) will be contingent on Bernanke's testimony tonight, with a dovish statement likely to support gold above the $1,600 an ounce level," ANZ said in a note.
Hints from the Fed that some members are becoming uncomfortable with its current ultra-loose monetary policy have hurt gold prices in recent weeks.
Successive rounds of U.S. monetary easing in recent years have kept up pressure on long-term interest rates and stoked fears over inflation, boosting gold. Signs of this being unwound could hurt the metal severely.
Investment interest in the metal has been weak this year. The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, reported its fourth successive daily outflow on Monday, of 7.8 tonnes.
That took its week-on-week decline to more than 50 tonnes.
Among other precious metals, platinum dipped into a discount to gold for the first time in over a month as it slid to a seven-week low at $1,577.49 an ounce. Heightened risk aversion is hurting industrial commodities like the autocatalyst metal.
Analysts say its rally to 17-month highs earlier this month had also left it overstretched.
Spot platinum was down 0.7 percent at $1,593 an ounce, while spot palladium was down 0.3 percent at $730.97 an ounce. Silver was down 0.3 percent at $28.94 an ounce. (Editing by Alison Birrane)