Gold futures for August delivery on the Comex division of the New York Mercantile Exchange gained 0.08% to $1,241.00 a troy ounce by 01:20AM ET (05:20 GMT).
The U.S. Dollar Indexthat tracks the dollar against a basket of six major currencies was unchanged at 94.48 on Tuesday as traders awaited further clues on monetary policy when Powell testify on the economy and monetary policy before the U.S. Senate Banking Committee later in the day.
The dollar plays a crucial role in determining gold’s direction, as a stronger dollar makes gold more expensive for holders of foreign currency.
Ahead of Powell’s appearance, the Fed gave a positive assessment of the U.S. economy, insisting that strong labor markets and inflation would support the central bank’s plan to continue with gradual rate hikes.
Analysts and many of Powell’s colleagues expect two more interest rate increases this year amid a continued economic expansion. The U.S. Commerce Department revealed on Monday that the country’s retail sales increased by 0.5% for the fifth month in a row, further supporting expectations of a Fed interest rate increase.
Higher rates are negative for gold as the precious metal struggles to compete with yield-bearing assets when rates rise.