Futures & Commodities

Gold falls as the dollar pares losses ahead of Yellen's testimony

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Gold eased on Tuesday as the U.S. dollar came off its lows and the market awaited Federal Reserve Chair Janet Yellen's semi-annual testimony to Congress on Wednesday and Thursday, which may provide more signals about a looming rate rise.

Prices briefly steadied after U.S. retail sales unexpectedly fell in June as households cut back on purchases of automobiles and other goods, raising concerns the economy was slowing again. This stoked concern over the outlook for the U.S. economy, knocking the dollar and fueling uncertainty over the timing of a Federal Reserve rate increase.

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was down 0.2 percent at $1,155 an ounce, while U.S. gold futures for August delivery settled down 0.2 percent at $1,153.50.

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"The retail sales were dovish today so it's a wait-and-see (for) what the Fed says later in the week," said Michael Loewen, commodities strategist for TD Securities in Toronto.

"Does the Fed stick to its script that it's been saying for a very long time now or do they look to the more recent data?"

Expectations for a rate hike have pushed gold down 2.5 percent this year. Gold tends to come under pressure as interest rates rise, as these boost the opportunity cost of holding the metal, while lifting the dollar, in which it is priced.

"Considering we have Janet Yellen speaking tomorrow, any weakness in economic data ahead of that may help soothe a few nerves," Saxo Bank's head of commodity research Ole Hansen said.

Stock markets worldwide rose modestly after a landmark nuclear deal between Tehran and six global powers left sanctions on Iran in place for now.

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Oil prices rose about 1 percent, reversing early losses after it became apparent that the deal will not immediately remove sanctions placed on Iranian crude export.

Technically, analysts said gold looks vulnerable to further losses.

"The metal is trading in a short-term bearish trend channel off the May 18 high of $1,232, marked by lower highs and lower lows," ScotiaMocatta's technical team said in a note.

In a note, Capital Economics said: "With the exception of gold, precious metal prices have recovered a little from last week's lows, supporting our view that the worst is over."

Silver was down 1.1 percent at $15.33 an ounce, platinum was 1 percent lower at $1,021.25 an ounce and palladium was down 0.6 percent at $653.