PRECIOUS-Gold slips to one-week low on dollar rally, focus on Fed

* Fed Chairman's two-day testimony starts on Wednesday
* Speculators raise net longs in COMEX gold in week to July
2
* SPDR Gold holdings fall 0.15% on Monday

(Adds comment, updates prices)
By Arpan Varghese
July 9 (Reuters) - Gold eased to a one-week low on Tuesday,
consolidating below $1,400 as the dollar rallied on expectations
of a less dovish U.S. Federal Reserve ahead of testimony from
the chairman of the central bank.
Spot gold XAU= was 0.2% lower at $1,391.94 per ounce by
1158 GMT, having earlier touched $1,386.11, its lowest since
July 2.
U.S. gold futures GCcv1 for August delivery shed 0.5% to
$1,393.70 per ounce.
"The (gold) market is clearly erring on the side of caution.
We have the dollar having moved higher and with that, gold is
struggling a bit," said Saxo Bank analyst Ole Hansen, noting
that bullion was managing to hold above key support around
$1,380.
Fed Chairman Jerome Powell's two-day testimony before
Congress starts on Wednesday, where investors will look for
further cues on the central bank's stance on monetary easing.
Expectations of a 50-basis-point interest rate cut by the
Fed this month have fallen to 5.9% from 25% last week,
propelling the dollar .DXY to a three-week high. USD/
FEDWATCH
However, chances of a 25-basis-point cut were at 98%.
"If Powell confirms a dovish view, we will see some renewed
dollar weakness and support for gold; bond yields will also find
some support. If not so dovish, and that is the current fear in
the market, then we could see some additional long liquidation,"
Saxo Bank's Hansen added.
Higher interest rates boost the dollar, making
dollar-denominated gold more expensive for buyers using other
currencies and reducing investor interest in non-yielding
bullion.
On the technical front, gold is now 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, the U.S. Commodity Futures
Trading Commission said on Monday. "The biggest risk in the market is the success gold has had
in attracting new buyers over the past month. Any change in the
short term outlook could have a negative impact on prices
because longs need to be reduced," Saxo Bank's Hansen said.
Meanwhile, the London Bullion Market Association (LBMA)
traded 227.6 million ounces of gold worth around $300 billion
during the week to June 23, the biggest weekly total since data
began in November. 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= was little
changed at $15.03 per ounce.
Palladium XPD= was down 0.7% at $1,551, and platinum
XPT= fell 0.6% to $808.33 per ounce.