(Reuters) – Gold eased to a one-week low on Tuesday, consolidating below $1,400 as the dollar rallied on expectations of a less dovish U.S. Federal Reserve ahead of testimony from the chairman of the central bank.

Spot gold was 0.2% lower at $1,391.94 per ounce by 1158 GMT, having earlier touched $1,386.11, its lowest since July 2. U.S. gold futures for August delivery shed 0.5% to $1,393.70 per ounce.

“The (gold) market is clearly erring on the side of caution. We have the dollar having moved higher and with that, gold is struggling a bit,” said Saxo Bank analyst Ole Hansen, noting that bullion was managing to hold above key support around $1,380.

Fed Chairman Jerome Powell’s two-day testimony before Congress starts on Wednesday, where investors will look for further cues on the central bank’s stance on monetary easing.

Expectations of a 50-basis-point interest rate cut by the Fed this month have fallen to 5.9% from 25% last week, propelling the dollar to a three-week high.

However, chances of a 25-basis-point cut were at 98%.

“If Powell confirms a dovish view, we will see some renewed dollar weakness and support for gold; bond yields will also find some support. If not so dovish, and that is the current fear in the market, then we could see some additional long liquidation,” Saxo Bank’s Hansen added.

Higher interest rates boost the dollar, making dollar-denominated gold more expensive for buyers using other currencies and reducing investor interest in non-yielding bullion.

On the technical front, gold is now consolidating around $1,400, plus or minus $20 per ounce, said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.

Hedge funds and money managers raised their bullish stance in COMEX gold in the week to July 2, the U.S. Commodity Futures Trading Commission said on Monday.

“The biggest risk in the market is the success gold has had in attracting new buyers over the past month. Any change in the short term outlook could have a negative impact on prices because longs need to be reduced,” Saxo Bank’s Hansen said.

Meanwhile, the London Bullion Market Association (LBMA) traded 227.6 million ounces of gold worth around $300 billion during the week to June 23, the biggest weekly total since data began in November.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15% to 795.80 tonnes on Monday.

Among other precious metals, silver was little changed at $15.03 per ounce.

Palladium was down 0.7% at $1,551, and platinum fell 0.6% to $808.33 per ounce.