Gold slips as dollar strengthens ahead of Powell's testimony

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US shares were set to drift lower with Dow futures slipping 0.2% to 26,725.

Mr Powell is set to testify on Wednesday after a strong June jobs report dampened expectations for aggressive Fed action.

Observers said that while a big cut - of 50 basis points - has all but been dismissed, the Fed is expected to unveil at least a 25 point reduction at its next gathering this month.

The U.S. Commodity Futures Trading Commission's latest Commitments of Traders report - released on Monday (a day later than usual due to the July 4 holiday) and covering data through July 2 - showed that long positions in gold had reached their highest level since September 2017, ahead of the U.S.jobs report.

The dollar could continue to creep higher if Powell's comments on the USA economy are perceived as neutral or even slightly hawkish, which would support the argument that additional rate cuts will be limited.

Since the start of the year, global equities have been bolstered by expectations central banks will keep interest rates at or near record lows to boost economic growth. US West Texas Intermediate was 0.12 percent down at $57.44 a barrel, and Spot gold gained 0.4 percent to $1,404.48 an ounce.

The Australian dollar dipped to $0.69190, the lowest in nearly three weeks after Australian consumer sentiment slummed to a two-year low, which could prompt another rate cut from the Reserve Bank of Australia and pressure the government to offer more fiscal support.

Investors have been mostly pausing ahead of the two days of congressional testimony from Federal Reserve Chair Jerome Powell.

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Futures for the S&P 500 sifted off 6.5 points, or 0.2%, at 2,975.50.

Germany's DAX declined 0.4% to 12,285, while Britain's FTSE 100 fell less than 0.1% to 7,533. The Nasdaq composite edged up less than 0.1%, while the Russell 2000 index of smaller company stocks dropped 0.2%.

Earlier rounds of US tariffs on trading partners including China had been dismissed as of little macroeconomic importance, with the Fed in early May still anticipating its policy rate would remain unchanged in a range of 2.25% to 2.50% for the rest of the year.

"Fed Powell's testimony will be scrutinized for both his views on the economic situation and guidance in terms of any upcoming moves", said Jingyi Pan, market strategist for IG in Singapore. Brent crude futures gained 64 cents to $64.80.

Brent crude futures rose 67 cents to $64.83, while United States crude gained 83 cents to $58.66 a barrel. Brent crude oil, the global standard, rose 60 cents to close at $64.76 a barrel.

The dollar also firmed to 108.96 yen, while the euro faded to $1.1204 having been as high as $1.1412 just a couple of weeks ago.

Earlier rounds of USA tariffs on trading partners including China had been dismissed as of little macroeconomic importance, with the Fed in early May still anticipating its policy rate would remain unchanged for the rest of the year.

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