Gold prices bounced back on Tuesday ahead of the release of minutes of the U.S. Federal Reserve`s previous meeting that could offer clues on the pace of the central bank`s interest rate hikes.
The minutes of the Fed`s last policy meeting, when it kept interest rates unchanged, will be released on Wednesday.
Spot gold was up 0.2 percent at $1,279.67 per ounce by 0439 GMT. The metal fell about 1.4 percent on Monday in its biggest one-day percentage drop since Sept. 11.
U.S. gold futures for December delivery gained 0.3 percent to $1,279.30.
"Given the fact that the December rate hike is almost a done deal, market watchers will look more closely at what is the Fed rhetoric for post December," OCBC analyst Barnabas Gan said.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
Fed Chair Janet Yellen said on Monday she would resign her seat on the Fed`s Board of Governors once Jerome Powell is confirmed and sworn in to replace her as head of the U.S. central bank.
"The fact that Yellen has now confirmed to leave is adding a little bit of volatility as traders adjust their positions while they make sense of the implications of the incoming new Fed chairman Jerome Powell in terms of interest rate direction," said Loh Mun Chun, Director, Private Wealth at GoldSilver Central in Singapore.
Traders were also keeping an eye on the geo-political front after U.S. President Donald Trump put North Korea back on a list of state sponsors of terrorism on Monday.
"It is very hard to predict as to what Trump is going to do... We are waiting to see how North Korea reacts and whether it escalates global tensions," OCBC`s Gan said.
Spot gold may break a support at $1,274 per ounce, and fall towards the Oct. 6 low of $1,260.16, according to Reuters technical analyst Wang Tao.
In other markets, the dollar gave back some of its gains in Asian trading but remained within sight of a one-week high against a basket of currencies as German political uncertainty continued to pressure the euro.
Silver rose 0.3 percent to $16.96 an ounce and platinum was up 0.6 percent to $928.70. Palladium gained 0.2 percent to $990.60 an ounce.
On Monday, silver fell 2.3 percent, its biggest percentage fall since Sept. 26, while platinum lost nearly 3 percent, marking its worst day since early May.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)