Gold edged lower on Tuesday on a firmer dollar and equities as the market awaited cues on the path of interest rate hikes in the United States ahead of Federal Reserve Chair Janet Yellen's testimony on Wednesday. The market was looking ahead to Wednesday and Thursday as Yellen will deliver two days of testimony on the US central bank's semi-annual report on monetary policy and the economy.
Based on the minutes of the last Federal Open Market Committee (FOMC) released on July 5, Yellen may testify that the Fed will seek to reduce the central bank's Treasury bond holdings and mortgage-backed securities by August, effectively tightening the supply of US dollars. The FOMC also indicated in the minutes that another interest rate hike would happen later this year.
"If the (Yellen) commentary is a little more hawkish, it's going to put a little more pressure on gold again and going by previous FOMC minutes, it's probably going to be," said MKS PAMP analyst Tim Brown, adding "a lot of it has already been priced in." Spot gold was down 0.2 percent at $1,211.34 per ounce as of 0656 GMT. US gold futures for August delivery fell 0.2 percent to $1,210.50 per ounce. Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund fell 0.35 percent to 832.39 tonnes on Monday from 835.35 tonnes on Friday.
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