CORRECTED-PRECIOUS-Gold slides to two-month low on U.S. rate expectations

(Corrects day in first paragraph)

* Hawkish tone from new Fed chief pressures gold

* Dollar index hits six-week high, euro eases

* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl

LONDON, March 1 (Reuters) - Gold fell to a two-month low on Thursday, extending losses for a third day after comments from Federal Reserve Chairman Jerome Powell this week shored up expectations for further increases in U.S. interest rates and held the dollar near a six-week peak. In his debut testimony before Congress on Tuesday, Powell gave an upbeat assessment of the U.S. economic outlook and indicated the central bank would press ahead with further rate rises after three last year. Tightening monetary policy tends to weigh on gold because it increases the opportunity cost of holding non-yielding assets while boosting the dollar, in which the metal is priced. The second leg of Powell's testimony, an opportunity to clarify comments made on Tuesday, is due at 1500 GMT.

Spot gold was down 0.8 percent at $1,306.70 an ounce

were $10.50 lower at $1,307.40. Spot prices earlier hit their weakest since Jan. 4 at $1,305.81. "We still expect the Fed to continue to hike interest rates, as economic growth is doing quite well in the United States and fiscal stimulus should help to boost growth further," said Capital Economics analyst Simona Gambarini. "As inflationary pressures build, the Fed will hike by more to prevent inflation from getting out of control. That doesn't bode well for gold prices. We expect real rates to increase, and that should see the gold price pull back a little," she said. Gold is on track for a second straight week of losses, having fallen 1.3 percent since Friday, while the metal ended February down 2 percent to snap three months of gains. The dollar has risen to its highest since mid-January, with the euro also under pressure from benign euro zone inflation data that dented expectations that the European Central Bank would curb its stimulus programme. From a technical perspective, gold is on the defensive after again failing to break above resistance at $1,362 an ounce in mid-February, Commerzbank said in a note on Thursday. "The sell-off has reached the 55-day moving average and the risk is we will see further slippage to the $1,306.95 Feb. 8 low and the 200-day moving average at $1,287.06," it said.

Among other precious metals, silver was down 1.1 percent at $16.22 an ounce, platinum was 1.7 percent lower at $966.80 and palladium was down 3 percent at

$1,010.75. Palladium was the best-performing precious metal last month, posting a 1.4 percent gain. Silver registered the biggest monthly loss, slipping by more than 5 percent.

(Additional reporting by Eileen Soreng in Bengaluru Editing by David Goodman and Edmund Blair)