PRECIOUS-Gold edges up from 1-week lows on bargain hunting; focus on Fed

* Fed Chair Powell's two-day testimony starts Wednesday
* Gold consolidating below $1,400 -analyst
* Speculators raise net longs in gold in week to July 2
* SPDR Gold holdings fall 0.15% on Monday

(Updates prices)
By Diptendu Lahiri
July 9 (Reuters) - Gold edged up on Tuesday after falling to
a one-week low earlier in the session as investors used the drop
in prices to buy the yellow metal with bullion holding a key
technical level.
The focus was on the U.S. Federal Reserve Chair Jerome
Powell's two days of testimony on monetary policy before the
U.S. Congress starting on Wednesday. Spot gold XAU= rose 0.2% to $1,397.30 per ounce at 1:52
p.m. EDT (1752 GMT). Earlier, prices hit the session trough of
$1,386.11, the lowest since July 2.
U.S. gold futures GCcv1 settled at $1,400.05 per ounce.
"The resurgence in U.S. dollar reaching a three-week high
moved gold at lower prices earlier in the session, following
which we are seeing a little bit of bargain buying which has
kept the market afloat," said Alex Turro, market strategist at
RJO Futures.
Earlier in the session the U.S. dollar rallied on the
likelihood of a modest quarter-point interest rate cut by the
Federal Reserve this month.
Expectations of a 50 basis point rate cut have fallen to
5.9% from 25% last week, propelling the dollar index .DXY to a
three-week high. USD/ FEDWATCH
Chances of a 25 basis point cut were at 98%.
The dollar was also supported by news the United States and
China were set to relaunch trade talks this week. USD/
"The key technical support around the $1,385.00 area has
held, encouraging some chart-based buying," said Jim Wyckoff,
senior analyst with Kitco Metals.
Despite gold breaking below the key $1,400 level, the
outlook for gold still remained positive, with analysts citing
support from Middle East tensions, Sino-U.S. trade war and
buying by central banks.
Top gold consumer China's reserves jumped to $87.27 billion
from $79.83 billion at end-May. "If Powell confirms a dovish view, we will see some renewed
dollar weakness and support for gold; bond yields will also find
some support," said Saxo Bank analyst Ole Hansen. Otherwise, he
said, gold "could see some additional long liquidation."
On the technical front, gold is consolidating around $1,400,
plus or minus $20 per ounce, said Samson Li, a Hong Kong-based
precious metals analyst at Refinitiv GFMS.
Hedge funds and money managers raised their bullish stance
in COMEX gold in the week to July 2. Holdings of SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, fell 0.15% to 795.80 tonnes on
Monday. GOL/ETF
Among other precious metals, silver XAG= rose 0.5% to
$15.10 per ounce.
Palladium XPD= was down 1% at $1,545.75, and platinum
XPT= fell 0.3% to $811.25 per ounce.