PRECIOUS-Gold hits one-week high as dollar dips after Powell's testimony

* Fed chair remarks revive prospect of aggressive rate cut
* Dollar droops to near one-week low
* Palladium surges above $1,600/oz to 16-weeks high
* SPDR Gold holdings rose 0.8% on Wednesday

(Updates prices)
By Brijesh Patel
July 11 (Reuters) - Gold prices scaled a more than one-week
peak on Thursday, as the dollar slipped after dovish remarks
from the U.S. Federal Reserve Chairman Jerome Powell boosted the
case for an interest rate cut later this month.
Spot gold XAU= was up 0.3% at $1,422.40 per ounce as of
0711 GMT, after earlier hitting its highest since July 3 at
$1,426.
U.S. gold futures GCv1 jumped 0.9% to $1,424.80 an ounce.
"Last night's move from the Fed is pretty convincing that
they are going towards more of a risk management overview policy
which is dovish," said Stephen Innes, managing partner at
Vanguard Markets, adding "also dollar trading lower is a huge
support for gold"
"Fed not only focused on concerns within the U.S. economy,
but also took into consideration the global economy, negative
impact from trade wars and basically hitting all the right
buttons for gold bulls."
In his testimony to Congress, Powell pointed to "broad"
global weakness that was clouding the U.S. economic outlook amid
uncertainty about the fallout from the Trump administration's
trade conflict with China and other nations.
Adding to a generally dovish tone in his testimony, the
minutes from the Fed's previous policy meeting showed many
policymakers thought more stimulus would be needed soon,
reviving speculation of an aggressive rate cut. "Powell's testimony made sure that there is a rate cut on
the cards this month. He has provided a loser monetary policy
base for gold prices gain further," said Howie Lee, an economist
at OCBC Bank.
In the wake of Powell's comments, the dollar .DXY dropped
to a five-day low, while the U.S. Treasury yield curve
steepened. USD/ US/
Lower interest rates decrease the opportunity cost of
holding non-yielding bullion and weigh on the dollar, making
gold cheaper for investors holding other currencies.
The Fed chair's cautious stance on the world's largest
economy helped revive some bets on heftier easing at its next
policy meeting on July 30-31 - chance of a 50 bps cut rose to
27.6% from 3.3% on Tuesday, according to CME Group's FedWatch
tool.
Prospects of a U.S. interest rate cut also spurred investors
towards riskier assets, with the S&P 500 .SPX briefly crossing
the 3,000-point mark for the first time. MKTS/GLOB
"When we see this correlation where gold is going up and
equity markets are also going higher this is very bullish signal
for gold. Gold to me is looking at a bigger picture which is
global risk, growth sentiment, escalations in the Middle East,"
Innes from Vanguard Markets said.
Indicative of sentiment, holdings of SPDR Gold Trust GLD ,
the world's largest gold-backed exchange-traded fund, rose
0.8%on Wednesday. GOL/ETF
Elsewhere, silver XAG= rose 0.2% to $15.27 per ounce,
platinum XPT= gained 0.4% to $828.15.
Palladium XPD= climbed 0.8% to $1,600.51 an ounce, after
hitting its highest since March 22 at $1,602.50.