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 US Federal Reserve Chair Jerome Powell's two days of testimony on monetary policy before the US 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.
US gold futures settled at $1,400.05 per ounce.
"The resurgence in US 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 US 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%.
Top gold consumer China's reserves jumped to $87.27 billion from $79.83 billion at end-May.
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.
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.
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