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· Gold edged up on Tuesday after falling to a one-week low earlier in the session as investors used the drop in prices to buy the yellow metal with bullion holding a key technical level.

· The focus was on the U.S. Federal Reserve Chair Jerome Powell’s two days of testimony on monetary policy before the U.S. Congress starting on Wednesday.

· Spot gold rose 0.2% to $1,397.30 per ounce at 1:52 p.m. EDT (1752 GMT). Earlier, prices hit the session trough of $1,386.11, the lowest since July 2.



U.S. gold futures settled at $1,400.05 per ounce.

· “The resurgence in U.S. dollar reaching a three-week high moved gold at lower prices earlier in the session, following which we are seeing a little bit of bargain buying which has kept the market afloat,” said Alex Turro, market strategist at RJO Futures.

· Earlier in the session the U.S. dollar rallied on the likelihood of a modest quarter-point interest rate cut by the Federal Reserve this month.



Expectations of a 50 basis point rate cut have fallen to 5.9% from 25% last week, propelling the dollar index to a three-week high.



Chances of a 25 basis point cut were at 98%.

· The dollar was also supported by news the United States and China were set to relaunch trade talks this week.

· “The key technical support around the $1,385.00 area has held, encouraging some chart-based buying,” said Jim Wyckoff, senior analyst with Kitco Metals.



Despite gold breaking below the key $1,400 level, the outlook for gold still remained positive, with analysts citing support from Middle East tensions, Sino-U.S. trade war and buying by central banks.

· Top gold consumer China’s reserves jumped to $87.27 billion from $79.83 billion at end-May.

· “If Powell confirms a dovish view, we will see some renewed dollar weakness and support for gold; bond yields will also find some support,” said Saxo Bank analyst Ole Hansen. Otherwise, he said, gold “could see some additional long liquidation.”

· On the technical front, gold is consolidating around $1,400, plus or minus $20 per ounce, said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.

· Hedge funds and money managers raised their bullish stance in COMEX gold in the week to July 2.

· Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15% to 795.80 tonnes on Monday.

· Among other precious metals, silver rose 0.5% to $15.10 per ounce.



Palladium was down 1% at $1,545.75, and platinum fell 0.3% to $811.25 per ounce.

Reference: Reuters