Gold prices eased on Wednesday, as the dollar climbed on reduced expectations of a sharp US interest rate cut and ahead of Federal Reserve Chairman Jerome Powell's congressional testimony due later in the day. Spot gold was down 0.5% at $1,391.35 per ounce as of 0717 GMT. US gold futures, too, slipped 0.5% to $1,393.50 an ounce.
"A stronger US dollar is clearly weighing on gold prices. Overall, it appears that the markets are backing away from their more dovish stance given that we have important minutes being released by the US Fed," said Michael McCarthy, chief market strategist, CMC Markets.
"Also, people are locking in gains and reducing positions ahead of those key events," he added.
The minutes from Fed's previous meeting will be released later in the day.
"Fading US rate cuts expectations have imposed considerable headwinds on bullion's appeal as traders pivot towards a strong recovery in the US dollar," Phillip Futures said in a note.
Commerce Secretary Wilbur Ross said the US government will issue licenses to companies seeking to sell goods to China's Huawei where there is no threat to national security.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22% to 794.08 tonnes on Tuesday from 795.80 tonnes on Monday. Spot gold is biased to break a support at $1,387 per ounce and fall into a range of $1,366-$1,377, according to Reuters technical analyst Wang Tao.
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