(Updates prices)
* Fed Chair testimony due at 1600 GMT
* Dollar index rises 0.4%
* European stocks ease from a one-year peak on new virus wave
By Sumita Layek
March 23 (Reuters) - Gold inched up in choppy trading on Tuesday, buoyed by easing U.S. Treasury yields while a firmer dollar capped gains, ahead of testimony from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen.
Spot gold XAU= rose 0.1% to $1,739.66 per ounce by 1205 GMT. U.S. gold futures GCv1 were unchanged at $1,738.70.
"The market seems to be struggling, especially at the $1,745 level, a little bit of weakness is coming in on a firmer dollar," said independent analyst Ross Norman.
But "looking ahead, it's going to be all about inflation in the second half of this year. And it'll be far, far hotter than the Fed's indicating" and gold will perform well then, Norman added.
Making gold expensive for other currency holders, the dollar .DXY rose 0.4%, although benchmark U.S. Treasury yields eased, reducing the opportunity cost for holding non-yielding gold. USD/ US/
European stocks eased from an one-year peak as a new wave of coronavirus infections and a fresh lockdown in Germany raised fears of a slow economic recovery. .EU
Investors were now looking toward the Congressional testimony by Powell and Yellen at 1600 GMT. The U.S. central bank last week reiterated its pledge to keep its ultra-easy monetary policy stance despite expected inflationary pressure. investors see more runway to challenge the Fed's outlook and push yields higher, that surge is likely to come at the expense of gold's upside," said FXTM market analyst Han Tan.
"Gold has all to do to break out of its current downward trend, especially with the recovering dollar standing in its way. Spot gold has to first break above its 50-day simple moving average in order to send a favourable signal to bullion bulls."
Silver XAG= fell 0.8% to $25.56 and platinum XPT= shed 0.9% to $1,171.98. Palladium XPD= slipped 0.6% at $2,599.48.