PRECIOUS-Gold slips as dollar strengthens ahead of Powell's testimony

* FOMC's June meeting minutes to be released at 1800 GMT
* SPDR Gold holdings fall 0.2% on Tuesday
* Investors still expect 25bp rate cut
* Spot gold likely to break support at $1,387/oz -
technicals

(Updates prices)
By Harshith Aranya
July 10 (Reuters) - Gold prices eased on Wednesday, as the
dollar climbed on reduced expectations of a sharp U.S. interest
rate cut and ahead of Federal Reserve Chairman Jerome Powell's
congressional testimony due later in the day.
Spot gold XAU= was down 0.5% at $1,391.35 per ounce as of
0717 GMT. U.S. gold futures GCv1 , too, slipped 0.5% to
$1,393.50 an ounce.
"A stronger U.S. dollar is clearly weighing on gold prices.
Overall, it appears that the markets are backing away from their
more dovish stance given that we have important minutes being
released by the U.S. Fed," said Michael McCarthy, chief market
strategist, CMC Markets.
"Also, people are locking in gains and reducing positions
ahead of those key events," he added.
The minutes from Fed's previous meeting will be released
later in the day.
The dollar edged toward a three-week high against a basket
of major currencies on Wednesday, as fading expectations of an
aggressive U.S. interest rate cut pushing Treasury yields
higher. USD/ US/
A stronger dollar makes gold costlier for holders of other
currencies.
Further gains in the greenback depend on the tone Federal
Reserve Chairman Jerome Powell strikes during two days of
Congressional testimony.
"Fading U.S. rate cuts expectations have imposed
considerable headwinds on bullion's appeal as traders pivot
towards a strong recovery in the U.S. dollar," Phillip Futures
said in a note.
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. FEDWATCH
Lower interest rates would support gold because they reduce
the opportunity cost of holding non-yielding bullion.
On the trade front, White House economic adviser Larry
Kudlow said U.S. and Chinese trade officials held a
"constructive" phone conversation on Tuesday. Commerce Secretary Wilbur Ross said the U.S. government will
issue licenses to companies seeking to sell goods to China's
Huawei where there is no threat to national security.
Meanwhile, holdings of SPDR Gold Trust GLD , the world's
largest gold-backed exchange-traded fund, fell 0.22% to 794.08
tonnes on Tuesday from 795.80 tonnes on Monday. GOL/ETF
Spot gold is biased to break a support at $1,387 per ounce
and fall into a range of $1,366-$1,377, according to Reuters
technical analyst Wang Tao. Among other precious metals, silver XAG= edged 0.2% lower
to $15.07 per ounce, and palladium XPD= fell 0.1% to
$1,545.88.
Platinum XPT= was flat at $805.98 an ounce.