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AMSTERDAM/LONDON: Gold retreated on Tuesday on a firmer dollar as traders eyed testimony by US Federal Reserve chair Jerome Powell for further clarity on monetary policy after the central bank struck a hawkish tone last week.

Spot gold fell 0.3% to $1,777.23 per ounce by 10:34 am EDT (1434 GMT), while US gold futures dropped 0.2% to $1,778.60.

Market participants are eyeing congressional testimony from Powell, from 1800 GMT, after the Fed signalled interest rates could rise into 2023 and it would begin taper asset purchases.

The announcement drove a 6% slide in gold last week, although it recouped some of those losses on Monday as a pause in the dollar’s rally prompted traders to make use of the dip to buy back the metal.

For the most part, the gold trade is struggling now because there’s no clarity on whether inflation is persistent, while safe-haven interest in bullion has also likely dipped with rising equities, said Edward Moya, senior market analyst at OANDA.

The dollar index ticked 0.2% higher on Tuesday, lowering gold’s appeal for other currency holders.

A rebounding dollar would likely continue to be a near-term headwind for gold, Moya said, adding Powell is unlikely to deviate from the Fed’s more hawkish tone last week.

Investors also digested Powell’s prepared testimony released late on Monday, where he said the US economy continues to show “sustained improvement” and predicated a decline in inflation from current elevated levels.

“Gold markets must now figure out if the June FOMC is indeed a structural shift in the outlook,” Citi Research said in a note.

“The boost in Fed growth and inflation forecasts, and improved labour market projections, could embolden gold bears in the very short run.”

Elsewhere, silver fell 0.6% to $25.79 per ounce, palladium eased 1.1% to $2,556.36 and platinum was up 1.5% at $1,069.10.

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