Gold rose on Tuesday, rebounding from a three-and-a-half-month low hit in the previous session, but remained on track for its biggest monthly decline since November on broad strength in the dollar and growing expectations of an imminent U.S. rate hike.
Spot gold was up 0.99 percent at $1,216.81 an ounce, having fallen by as much as 1 percent on Monday to $1,199.60. That was its lowest since Feb. 17, pressured by strength in the dollar and a rise in global share prices, increasing investors' risk appetite and leaving gold set for a 6.2 percent decline in May.
U.S. gold futures settled up 80 cents at $1,217.50.
"If you get a pick-up in growth expectations in the U.S. and aggressive rate hikes from the Fed, then you could revisit the low of the year (at $1,127.80), but I see that as an unlikely scenario," ABN Amro analyst Georgette Boele said, adding the next support level is the 200-day moving average of $1,163.
Spot silver was headed for its biggest monthly loss since September 2014, down almost 10 percent. It touched a seven-week low in the previous session before recovering to $16 on Tuesday.
Gold, which had risen 16 percent in the first quarter, has been under pressure since release of the minutes from the Federal Reserve's April meeting boosted expectations of an imminent U.S. rate rise. Subsequent comments from key central bank officials, including Fed Chair Janet Yellen, have suggested an increase will come in June or July.
The dollar hovered near its highest in two months against a basket of currencies on Tuesday.
"Short-term downside risks are primarily related to a further strengthening of the U.S. dollar and a further cooling of futures market sentiment," Julius Baer said in a note.
Investors will monitor May U.S. private-sector ISM manufacturing data, due on Wednesday, and non-farm payrolls on Friday. Solid readings could heighten expectations for a move as early as the Fed's June 14-15 policy meeting.
An increase in rates would raise the opportunity cost of holding gold, which does not earn interest. It would also bolster the dollar, making gold more expensive for buyers in other currencies.
Spot platinum rose 1.4 percent to $977 an ounce, having hit its lowest in seven weeks in the previous session.
Spot palladium, meanwhile, was up 0.97 percent at $544.96 but was still heading for its biggest monthly loss since November.