BENGALURU, July 10 (Reuters): Gold eased on Wednesday as expectations of a sharp US interest rate cut receded while investors awaited Federal Reserve Chairman Jerome Powell's congressional testimony for concrete signals on the central bank's monetary policy strategy.
Spot gold was down 0.2 per cent at $1,395.60 per ounce as of 1014 GMT.
US gold futures dipped 0.2 per cent to $1,397.60 an ounce.
"There are some expecting a cut in July but the market as a whole might have scaled back the time horizon a little bit into the future. In my point of view, the economy in the US is not as bad as would require a rate cut by the Fed," said Quantitative Commodity Research analyst Peter Fertig.
"The recent labour market report underlined that there is no urge for cutting rates."
While markets focus on the tone Chairman Jerome Powell strikes during two days of Congressional testimony, the minutes from the Fed's previous meeting will also be released later in the day.
Expectations for a 50 basis point rate cut this month have faded after a forecast-beating job gains reported last week, but investors still expect a 25 basis point cut due to weak inflation and US-China trade war worries.
"A cut of 25 bps is priced in by the markets, however Powell may look to manage future expectations going forward," MKS PAMP said in a note.
Atlanta Fed President Raphael Bostic on Tuesday said the central bank is debating the risks and benefits of letting the US economy run "a little hotter," balancing the good it could do for workers against the possibility it could end in a recession.
Meanwhile, Germany's 10-year government bond yield rose to its highest since July 1, boosted by French industrial production data, adding further pressure on the bullion.
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