(Reuters) - Gold edged lower on Monday, pressured by a firmer dollar although it was regaining its footing after last week's biggest weekly loss in more than two months, supported by demand from jewellery makers in Asia that is helping to cushion the fall. 

Spot gold lost nearly 4 percent last week, after U.S. Federal Reserve Chairman Ben Bernanke disappointed the market by making no reference to further monetary easing in congressional testimony.

 

Prices have since rebounded modestly and found solid support at the $1,700 level, with investors still confident in gold's appeal as real interest rates remain low and inflation looms as a longer-term concern.

 

"There isn't much room on the downside for gold, because the sharp fall last week was an over-reaction to an unfulfilled expectation," said Hou Xinqiang, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.