LONDON - Gold prices held their ground on Tuesday as nervous investors awaited testimony from the new chair of the U.S. central bank, but an analyst warned bullion was vulnerable to profit taking.
Spot gold was unchanged at $1,333.15 an ounce at 0950 GMT.
U.S. gold futures added 0.2 percent to $1,335 per ounce.New Federal Reserve chief Jerome Powell is expected to take a neutral line in his testimony to the U.S. Congress, but if he aligns with the current FOMC consensus of three rate increases this year, that is more tightening than is priced in by markets.
The dollar index fell before Powell's testimony, due at 1500 GMT. The index has rebounded 1.7 percent since falling to a three-year low of 88.25 on Feb. 16.
"Some in the market believe he is going to be bit less hawkish, so that's why the dollar is under pressure," said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam.
"Once they realise that the policy's going to continue like it has, then the dollar should recover and gold move lower. With the positioning that's in place, we'll get profit-taking in long euros and long gold."
Boele expects gold to slip under $1,300 an ounce by the end of the quarter.
"Initial support for the metal holds around $1,325-$1,330, while resistance cuts in broadly between $1,340-$1,345," MKS PAMP Group trader Sam Laughlin said in a note.
"Investors will be keen to hear what Powell has to say particularly over the balance sheet and his views on inflation," ANZ analyst Daniel Hynes said.
While inflation worries could spur safe-haven gold buying, rising interest rates would pressure the metal because bullion pays no interest.
Meanwhile, global shares rose to three-week highs on Tuesday as U.S. borrowing costs eased ahead of Powell's testimony.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.21 percent to 831.03 tonnes on Monday from 829.26 tonnes on Friday.
Among other precious metals, silver dipped 0.1 percent at $16.64 an ounce.
Palladium edged down 0.1 percent to $1,060.50 per ounce. Platinum fell 0.3 percent at $996.90 per ounce.