By Sethuraman N R
(Reuters) - Gold on Thursday held slightly above a four-week low touched in the previous session as the dollar lost some strength ahead of a speech by Federal Reserve Chair Janet Yellen that may yield clues on U.S. interest rate policy.
Yellen is scheduled to address a meeting of central bankers in Jackson Hole, Wyoming, on Friday, and recent comments from Fed policymakers have raised investors' expectations that she might adopt a less cautious tone on rates.
"Investors are positioning themselves largely on Yellen's speech with expectations that her message would be quite hawkish in terms of the outlook for the U.S. economy and the possibility of a rate hike," said Vyanne Lai, an economist at National Australia Bank.
"Gold will be in a defensive mode for today and tomorrow as there aren't many market-moving data points apart from what Yellen is going to say. Any hawkish comments could turn gold prices bearish next week," Lai said.
Rising U.S. interest rates typically increase the opportunity cost of holding non-yielding bullion and boost the dollar, which makes it more expensive to buy gold for those holding other currencies.
Spot gold was up nearly 0.2 percent at $1,325.30 an ounce at 0703 GMT. The metal touched a 4-week low of $1,323.20 on Wednesday on a firm dollar.
U.S. gold was nearly flat at $1,328.90 an ounce.
The dollar index, which tracks the greenback against a basket of six major currencies, was down slightly at 94.754.
The dollar has swayed back and forth over the past week as investors have gauged the chances of a near-term Fed rate hike.
U.S. home resales gave a mixed picture on the world's largest economy, falling more than expected in July after four straight months of strong gains, as a lack of inventory limited choice for buyers. But further price gains also suggested the housing market remained on solid ground.
Spot gold may drop to $1,308 per ounce, as it has cleared a key support at $1,334, according to Reuters technical analyst Wang Tao.
Silver rose 0.3 percent to $18.56 an ounce, after hitting an eight-week low of $18.46 earlier in the session.
Platinum and palladium were up 0.4 and 0.6 percent at $1,076.70 and $685.75, respectively, after touching their lowest in more than four weeks on Wednesday.
"The platinum group metals (PGMs) fell harder than gold, possibly due to thinner trading conditions," HSBC analyst James Steel said.
A weaker South African rand may also be weighing on the metals, Steel said.
(Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Tom Hogue)
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