July 10, 2019 / 1:28 AM / 4 months ago

PRECIOUS-Gold dips as dollar ticks higher, all eyes on Fed

July 10 (Reuters) - Gold prices slipped on Wednesday as higher Treasury yields lifted the dollar, while markets awaited testimony from Federal Reserve Chair Jerome Powell for clarity on an expected U.S. rate cut.

FUNDAMENTALS

* Spot gold was down 0.4% at $1,391.98 per ounce at 0103 GMT.

* U.S. gold futures slipped 0.4% to $1,394.40 an ounce.

* The dollar index edged toward a three-week high against a basket of major currencies on Wednesday, as easing bets of deep U.S. interest rate cuts pushed Treasury yields higher.

* Fed Chair Powell testifies before Congress on Wednesday and Thursday and the direction of the U.S. dollar depends on the tone of his comments. Expectations for a 50 basis point rate cut this month have evaporated, but investors still expect a 25 basis point cut due to weak inflation and trade war worries.

* Futures are still fully priced for a 25-basis-point cut at the Fed’s July 30-31 meeting, but have abandoned wagers on a half-point move. They had implied a 25% probability of an aggressive cut before Friday’s upbeat jobs report.

* Overnight, Atlanta Fed bank president Raphael Bostic let nothing out of the bag by saying the central bank was debating the risks and benefits of letting the U.S. economy run “a little hotter.”

* Asian shares inched ahead on Wednesday.

* On the trade front, White House economic adviser Larry Kudlow said U.S. and Chinese trade officials held a “constructive” phone conversation on Tuesday.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.22% to 794.08 tonnes on Tuesday from 795.80 tonnes on Monday.

DATA AHEAD (GMT)

* 0130 China CPI YY June

* 0200 (approx) China M2 money Supply YY June

* 0830 UK GDP Estimate YY May

* 0830 UK Manufacturing Output MM May

* 1400 US Federal Reserve Chairman Jerome

Powell testifies on the Semiannual Monetary Report to Congress before the House Financial Services Committee

* 1800 US Federal Open Market Committee will release the minutes from its June (Reporting by Harshith Aranya in Bengaluru; editing by Richard Pullin)

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