Investing.com - Gold futures trimmed losses in North America trade on Wednesday, after Federal Reserve Chair Janet Yellen said that financial conditions have become less supportive to growth as foreign developments pose risks to the economic outlook.
If these conditions persist, they could weigh on the economy, the Fed chief added.
In prepared remarks released before her testimony to the House Financial Services committee, Fed Chair Yellen said if the economy were to disappoint, a lower path of the Federal Funds rate would be appropriate.
Her testimony to the House Financial Services Committee will start at 15:00GMT, or 10:00AM ET. The Fed chief is expected to defend the U.S. central bank's first rate hike in a decade last December and likely insist that further rises this year remain on track, albeit at a slower pace.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold for April delivery on the Comex division of the New York Mercantile Exchange shed $9.30, or 0.78%, to trade at $1,189.30 a troy ounce by 14:20GMT, or 9:20AM ET. Prices fell by as much as 1.4% earlier to hit an intraday low of $1,181.90.
Gold rallied to an eight-month high of $1,201.40 on Monday amid indications global economic and financial headwinds could make it tough for the Federal Reserve to raise interest rates as much as it would like this year.
Market participants have all but priced out any rate hikes this year amid signs of stress in the global financial system, while the Fed is indicating four more.
Gold prices are up almost 12% so far this year as investors seek safe havens in the face of mounting instability in other financial markets. The yellow metal is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.