Gold inches lower; Fed chair hearing, U.S. tax reforms in focus

By Vijaykumar Vedala

(Reuters) - Gold prices edged lower on Tuesday but held not far off a six-week high hit in the previous session, as investors awaited a confirmation hearing for U.S. Federal Reserve chair nominee Jerome Powell and a possible Senate vote on U.S. tax reforms.

Spot gold was down 0.1 percent at $1,293.83 an ounce, as of 0739 GMT. In the previous session, the metal touched a high of $1,299.13 an ounce, its highest since Oct. 16.

U.S. gold futures dipped 0.1 percent to $1,293.20.

In remarks prepared for his Tuesday hearing released by the Fed, Powell defended the central bank's use of broad crisis-fighting powers positioning himself as an extension of the central bank policies of current Chair Janet Yellen and her predecessor Ben Bernanke.

"His (Powell's) decisions on rates are suggested to be almost indistinguishable from those of his predecessor, but I would not be surprised if in the next few months we see him taking a dovish path," ActivTrades chief analyst Carlo Alberto de Casa said.

"I don't think he will push to raise rates too much, but will instead monitor U.S. inflation and the job market."

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

The dollar held steady versus the yen on Tuesday and held above a two-month low, with the near-term focus on a possible Senate vote on a U.S. tax plan later in the week.[USD/]

"It will keenly watched particularly the details of the cuts. There is a risk it could be slightly watered down than what was originally proposed by (President Donald) Trump," ANZ analyst Daniel Hynes said.

Reports suggesting that North Korea may be preparing for another ballistic missile launch could spur some safe haven buying, analysts said.

"I suppose it is probably the one thing which could instigate a rally through $1,300. Otherwise, it is going to be the U.S. dollar which drives trade for the moment," ANZ's Hynes said.

Speculators cut their net long positions in COMEX gold and silver contracts in the week to Nov. 21, U.S. Commodity Futures Trading Commission (CFTC) data showed on Monday. Speculators cut their net long position in gold by 3,944 contracts to 177,066 contracts in the week.

Spot gold may seek a support around $1,292 per ounce, and then resume its rally towards a resistance at $1,301, according to Reuters technical analyst Wang Tao.

Meanwhile, silver was up 0.1 percent at $17.038 an ounce, platinum gained 0.2 percent to $948.70, while palladium slipped 0.4 percent to $1,003.00.

(Reporting by Vijaykumar Vedala in Bengaluru; Editing by Richard Pullin and Sherry Jacob-Phillips)