Gold ticks up on dollar dip; focus on Powell's testimony

Gold edged up on Tuesday as the dollar eased but lacked clear momentum as traders positioned for U.S. Federal Reserve Chair Jerome Powell's testimony later this week for more clues on the interest rate path.

Spot gold GOLD rose 0.2% to $1,953.99 per ounce by 12:25 GMT. U.S. gold futures GOLD fell 0.3% to $1,966.00.

While a weaker dollar was boosting gold, bullion was likely to hold in its range ahead of Powell's congressional testimony on Wednesday and Thursday, said Peter Fertig, an analyst with Quantitative Commodity Research.

The dollar DXY was 0.1% lower, making bullion cheaper for holders of other currencies.

"Further guidance on the U.S. rate outlook from the Fed chair should provide some direction to U.S. Treasuries, which have been weakening following repricing of at least one more 25-bps rate hike this year," analysts at investment bank SP Angel wrote in a note.

Benchmark U.S. yields US10Y were near session-lows. Higher interest rates increase the opportunity cost of holding non-yielding bullion.

Commerzbank analysts lowered their gold price estimate for the second half of 2023 by $50 to $2,000 per ounce, seeing another rate hike by the Fed in July and no rate cuts until the second quarter next year.

Traders see a 74% chance of a 25-bps rate hike in July, with rate cuts expected only when 2024 begins, according to CME's Fedwatch tool.

Meanwhile, European and Asian stocks fell after China's interest rate cuts were below expectations and the market awaited more details on Beijing's plans to shore up a stuttering economic recovery.

However, investment demand for gold in China, the world's biggest bullion consumer, would remain in the short term due to economic uncertainties, Fertig said.

Gold priced in the onshore yuan (XAUCNY=R) and offshore yuan (XAUCNH=R) was up 0.4% on the day.

Spot silver XAGUSD1! fell 0.5% to $23.83 per ounce, platinum PL1! was down 0.8% at $968.34, while palladium XPDUSD1! was 0.3% lower at $1,402.84.