(Adds analyst comments and updates prices) * Dollar index hovers below two-month high * Substantial progress made on inflation goal - Fed’s Barkin * Gold to resume its downward trend this week - analyst June 29 (Reuters) - Gold prices edged lower on Tuesday to hover near a one-week low hit in the previous session, weighed down by a firm dollar and concerns that the U.S. Federal Reserve will tighten its monetary policy sooner than expected. Spot gold was down 0.2% to $1,775.49 per ounce by 0255 GMT, after marking its lowest since June 21 at $1,770.36 on Monday. U.S. gold futures fell 0.3% to $1,775.70. ED&F Man Capital Markets analyst Edward Meir said listless trading was seen in the gold market as some market participants were still confused over the Fed’s policy outlook. Several Fed policy makers have turned hawkish despite a weaker-than-expected U.S. inflation reading last week. The Fed has made “substantial further progress” towards its inflation goal in order to begin tapering asset purchases, Fed Bank of Richmond President Thomas Barkin said. The dollar hovered below a two-month high against its rivals, making gold more expensive for holders of other currencies. However, Meir said, “the dollar will start to weaken again, because the landscape is clear on the rate (hike) front for at least another 18 months to two years.” Gold is seen as a hedge against inflation, though a Fed rate hike will increase the opportunity cost of holding bullion and dull its appeal. “Although having rebounded (from a selloff two weeks ago), gold has continued to trade below its 100-day moving average level,” OCBC said in a note. “We expect gold to resume its downward trend this week as risk sentiment firms and markets continue to look towards the prospects of tightening monetary conditions from the Fed.” Silver eased 0.4% to $25.99 per ounce, palladium slipped 0.2% to $2,680.62, and platinum shed 0.1% to $1,088.93. (Reporting by Sumita Layek in Bengaluru; Editing by Subhranshu Sahu) Our Standards: The Thomson Reuters Trust Principles.