Gold reversed course to jump nearly 1pc on Wednesday after Federal Reserve Chairman Jerome Powell highlighted risks to the US economy and bolstered expectations of an interest rate cut later this month.
In prepared remarks to a congressional committee, Powell said concerns about trade policy and a weak global economy "continue to weigh on the US economic outlook" and the Fed stood ready to "act as appropriate" to sustain a decade-long expansion.
Powell will present his remarks and take questions from members of the US House of Representatives Financial Services Committee beginning at 10 a.m. EDT (1400 GMT), and will testify again on Thursday before the Senate Banking Committee.
Spot gold was up 0.8pc to $1,409.36 per ounce at 1303 GMT, reversing a decline earlier in the session.
US gold futures were up 0.8pc to $1,411.3 per ounce.
"Powell's done enough to convince traders he is not closing the door but leaving it ajar with regards to rate cuts referencing a weaker economy, referencing business growth and stagnating economic growth," said Craig Erlam, senior market analyst with OANDA.
"This is as dovish as we could have potentially hoped for and the gold market has jumped straight on that. The dollar has come off and gold in tandem has rebounded higher."
Helping bullion's reversal, the dollar fell against a basket of currencies following Powell's remarks. Market participants will now scan minutes from the Fed's June meeting, due later in the day.
Expectations for a 50 basis point rate cut this month have faded after forecast-beating job gains reported last week, but investors still expect a 25 basis point cut due to weak inflation and US-China trade war worries.
"Supportive interest towards $1,380 should provide a base over the near term, with potential extension towards $1,360. Resistance meanwhile cuts in initially at $1,400, with extension toward $1,410," MKS PAMP said in a note.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22pc to 794.08 tonnes on Tuesday from 795.80 tonnes on Monday.
On the trade front, White House economic adviser Larry Kudlow said US and Chinese trade officials held a "constructive" phone conversation on Tuesday, marking a new round of talks after the world's two largest economies agreed to a truce in a year-long trade war.
Among other precious metals, silver gained 1.1pc to $15.26 per ounce, and palladium was up 2.1pc at $1,578.69.
Platinum rose 2.2pc to $823.72 an ounce.
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