* SPDR Gold Trust holdings fell 0.3% on Monday
* Powell testimony before Congress due at 1800 GMT (Recasts, adds comment, updates prices)
June 22 (Reuters) - Gold prices edged lower on Tuesday, ceding some of the previous day’s 1%-plus gain as a dollar uptick before a speech by Fed boss Jerome Powell reduced the appeal of safe-haven bullion.
Spot gold was down 0.2% at $1,778.80 per ounce by 0916 GMT, though it stayed well off the seven-week lows hit in the wake of the U.S. Federal Reserve’s policy meeting last Wednesday.
U.S. gold futures slipped 0.2% to $1,778.80 per ounce.
Michael Hewson, chief market analyst at CMC Markets, said the recent gold selloff was “slightly too aggressive” and as markets digested the policy shift “we could see some rebound over the next couple of days” towards the $1,800-$1,820 area.
Gold prices fell 6% last week, their biggest weekly slide since March 2020, after the Fed signalled interest rates could rise in 2023. They clawed back some losses on Monday as the dollar rally paused and traders used the dip to buy. .
Higher rates and bond yields reduce the opportunity cost of holding gold, a non-interest bearing asset. The dollar index rose 0.2% on Tuesday while 10-year U.S. Treasury yields also rose off the four-month lows touched on Monday
Powell, who will appear before Congress from 1800 GMT, in prepared remarks said inflation had “increased notably in recent months”.
That is keeping many pessimistic about gold’s prospects. Reflecting those jitters, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.3% on Monday.
“A stronger dollar and the prospects of higher interest rates are set to offer the zero-yielding metal nothing but more potential pain ahead,” FXTM analyst Lukman Otunuga said.
Elsewhere, silver fell 0.3% to $25.87 per ounce, palladium gained 0.1% to $2,588.00, and platinum was trading 0.2% higher at $1,054.94.
(Reporting by Arundhati Sarkar in Bengaluru; editing by Sujata Rao)
Source: Reuters