Gold prices edged lower on Tuesday but held not far off a six-week high hit in the previous session, as investors awaited a confirmation hearing for U.S. Federal Reserve chair nominee Jerome Powell and a possible Senate vote on U.S. tax reforms.
Spot gold was down 0.1 percent at $1,293.00 an ounce at 0435 GMT. On Monday, the metal touched a high of $1,299.13 an ounce, its highest since Oct. 16.
U.S. gold futures dipped 0.1 percent at $1,293.10.
In remarks prepared for his Tuesday hearing released by the Fed, Powell defended the central bank's use of broad crisis-fighting powers positioning himself as an extension of the central bank policies of current Chair Janet Yellen and her predecessor Ben Bernanke.
"His (Powell's) decisions on rates are suggested to be almost indistinguishable from those of his predecessor, but I would not be surprised if in the next few months we see him taking a dovish path," ActivTrades chief analyst Carlo Alberto de Casa said.
"I don't think he will push to raise rates too much, but will instead monitor U.S. inflation and the job market."
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
The U.S. dollar was treading water on Tuesday with the near-term focus on any Senate vote on the U.S. tax plan later in the week. [L1N1NX13C][USD][MKTS/GLOB]
"It will keenly watched particularly the details of the cuts. There is a risk it could be slightly watererd down than what was originally proposed by (President Donald) Trump," ANZ analyst Daniel Hynes said.
Reports suggesting that North Korea may be preparing for another ballistic missile launch could spur some safe haven buying later in the day, analysts said.
"I suppose it is probably the one thing which could instigate a rally through $1,300. Otherwise, it is going to be the U.S. dollar which drives trade for the moment," ANZ's Hynes said.
Speculators cut their net long positions in COMEX gold and silver contracts in the week to Nov. 21, U.S. Commodity Futures Trading Commission (CFTC) data showed on Monday. Speculators cut their net long position in gold by 3,944 contracts to 177,066 contracts in the week.
Spot gold may seek a support around $1,292 per ounce, and then resume its rally towards a resistance at $1,301, according to Reuters technical analyst Wang Tao.
Meanwhile, silver was up 0.1 percent at $17.04 an ounce, platinum gained 0.1 percent at $948.10, while palladium was down 0.2 percent at $1,004.50.