US gold futures for February delivery rose 0.4 percent to $1,339.80 per ounce. Gold prices were on track for a third consecutive monthly gain and are up 3.1 percent so far in January, their best month since August, largely due to weakness in the dollar.
"Yellen may deliver a hawkish surprise setting the stage for a possible policy pivot while trumpeting in the Powell era. Gold bears may take advantage of this move," said Stephen Innes, APAC trading head for OANDA. A rate hike in March would not come as a surprise, but any change in the pace of hikes would pose a risk to gold's rally, Innes noted.
Spot gold is expected to break support at $1,335 per ounce and fall more towards the Jan. 18 low of $1,323.70, as suggested by its wave pattern and a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.