Gold pinned near 1-month low as stronger dollar, Fed worries weigh

Gold pinned near 1-month low as stronger dollar, Fed worries weigh

* Focus on Powell's speech at Jackson Hole this week

* Palladium up more than 1%

* Spot gold may test resistance at $1,744/oz - technicals (Recasts, and updates prices)

By Brijesh Patel

Aug 23 (Reuters) - Gold languished near a one-month low on Tuesday, as a stronger dollar diminished bullion's appeal and investors remained wary of aggressive interest rate hikes by the Federal Reserve.

Spot gold XAU= was little changed at $1,737.60 per ounce, as of 0537 GMT, after hitting its lowest since July 27 at $1,727.01 on Monday. U.S. gold futures GCv1 were flat at $1,748.80.

"Concerns that Fed Chair Jerome Powell will deliver a hawkish message at the Jackson Hole Symposium alongside a recession warning has seen the U.S. dollar surge and weigh on the yellow metal," said Matt Simpson, a senior market analyst at City Index.

"A clear indication that gold investors are concerned is that the CBOE gold volatility index and downside protection – via put options – are both on the rise. I'm on guard for further losses and for gold's potential to fall to $1,700."

The dollar USD= erased earlier losses and gained 0.1%, attempting to breach a two-decade high hit in July. A stronger dollar makers gold more expensive for buyers holding other currencies.

Rapid Federal Reserve rate hikes since March and hawkish comments on further tightening have dented bullion's appeal as an inflation hedge. Gold prices have fallen more than $300 since scaling above the key $2,000-per-ounce level in early March.

Powell will address the annual global central banking conference in Jackson Hole, Wyoming, on Friday, a highly anticipated speech that could signal how high U.S. borrowing costs may go.

Fed funds futures are now pricing in a 58.5% chance of a 75-basis-point rate hike in September. FEDWATCH Higher interest rates increase the opportunity cost of holding non-yielding bullion.

On the technical front, spot gold may test a resistance at $1,744 per ounce, a break above which could lead to a gain to $1,759, according to Reuters technical analyst Wang Tao.

Elsewhere, spot silver XAG= fell 0.5% to $18.91 per ounce, platinum XPT= slipped 0.6% to $870.57, and palladium XPD= climbed 1.1% to $2,018.39.
Reporting by Brijesh Patel in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu