LONDON: Gold eased back on Tuesday from the previous day`s six-week high as the dollar edged up ahead of a confirmation hearing for U.S. Federal Reserve chair nominee Jerome Powell.
In prepared remarks for the hearing released by the Fed on Monday, Powell defended the Fed`s use of its crisis-fighting powers, suggesting a broad extension of current Chair Janet Yellen`s stance on monetary policy.
However, there is some risk around the event which is supporting the dollar after its slide to two-month lows on Monday, analysts said.
Spot gold was down 0.1 percent at $1,293.21 an ounce at 1105 GMT, having hit a peak of $1,299.13 on Monday, its highest since mid-October. U.S. gold futures for December delivery were down $1.60 an ounce at $1,292.80.
The dollar index was 0.2 percent higher against a currency basket.
"The dollar was under pressure yesterday, but we`ve seen some recovery dollar-wise, and that has been weighing on gold," ABN Amro analyst Georgette Boele said. "We have Yellen and the hearing of Powell, so (traders) are a bit cautious."
Powell is seen as likely to continue with policies put in place by Yellen, she added. "He will likely continue to hike interest rates at a modest pace," she said.
The Fed`s ultra-low interest rate policy has been a key factor supporting gold over the last decade. Low rates cut the opportunity cost of holding non-yielding assets such as bullion, while depressing the dollar, in which it is priced.
The U.S. currency has also been weighed down in recent days by worries about delays in the implementation of U.S. tax cuts.
President Donald Trump`s drive to overhaul the U.S. tax code headed toward a new drama on Tuesday in the Senate, where a pair of Republican lawmakers demanded changes to the party`s tax bill in exchange for their help in moving it forward.
Among other precious metals, silver was down 0.1 percent at $17.01 an ounce, while platinum was 0.2 percent lower at $945.50 and palladium was down 0.6 percent at $1,001.05.
Platinum has broadly maintained a historically unusual discount to its sister metal palladium since late September.
Platinum looks oversold, HSBC said in a note on Monday, as greater investor and jewellery demand has the potential to support prices, while concerns over demand from carmakers, which use the metal in catalytic converters, may be exaggerated.
Palladium has surged on structural deficits caused by limited mine supply and good auto demand, it added, but its rally is vulnerable to profit taking.
"Investor demand has figured prominently in the rally and any reduction in this interest may lead to corrections as speculative investors take profits," it said.