Gold inched lower on Tuesday, as investors turned cautious after the metal failed to sustain a recent rally, though it held near the previous day's two-week high after the Federal Reserve further dampened speculation about an imminent U.S. rate rise.
The consolidative session came after Federal Reserve chair Janet Yellen gave a largely upbeat outlook for the U.S. economy on Monday and said interest rate increases were coming. Investors, however, focused on her lack of guidance about when they would materialize.
Spot gold was down 0.12 percent at $1,243.36 an ounce, while U.S. gold futures for August delivery settled down 40 cents at $1,247 an ounce. Spot gold hit its highest since May 24 on Monday at $1,248.40.
"We still have a lot of uncertainty out there and I think gold is a well bid market, so dips are going to be bought," said Bill O'Neill, co-founder of commodities investment firm Logic Advisors.
"There isn't going to be a lot of aggressive selling, so there's bit of a vacuum of selling."
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which the metal is priced.