Gold was largely unchanged on Tuesday as markets shifted focus from hawkish comments by a Federal Reserve official over the weekend to a meeting of global central bankers later this week that might provide hints on the timing of a U.S. interest rate increase.
Spot gold fell 0.1 percent to $1,336.95 per ounce, having hit a two-week low of $1,331.35 in the previous session. The most active U.S. gold futures for December delivery settled up $2.70, or 0.20 percent, at $1,346.1 per ounce, and were last down 9.13 percent at $1,341.70.
Prices fell on Monday after weekend comments by the Fed's No. 2 policymaker, Stanley Fischer, saying that the U.S. central bank is close to hitting targets for full employment and 2 percent inflation, raising the prospect of a U.S. rate increase.
U.S. Federal Reserve Chair Janet Yellen may provide more clarity on interest rates in a speech at the meeting of central bankers, an annual gathering in Jackson Hole, Wyoming, starting Aug. 25.
"We're very much locked into a range here and we're just waiting for Janet," said Bart Melek, head of commodity strategy at TD Securities in Toronto.
"The sense going into that meeting is that the Fed may be a little bit more hawkish than previously and if the Fed does go hawkish, we could see gold retrace back to $1,300 or maybe slightly lower."
The Fed last week sent mixed messages in the minutes of its July meeting, though some members have suggested that rates could rise as soon as September.
The Fed increased rates for the first time in a decade in December, but expectations that it would hold off on further increases have helped to drive a 26 percent gain in gold prices this year.
Gold is highly sensitive to rising rates, which boost the opportunity cost of holding non-yielding bullion while lifting the dollar, in which it is priced.
"Recent comments from Federal Reserve officials have been mixed, but the majority of their recent rhetoric has leaned toward the hawkish side of U.S. monetary policy," Kitco Metals analyst Jim Wyckoff said in a note. "There are now increasing ideas in the marketplace that the Fed will raise interest rates yet this year."
The dollar rose 0.03 percent against a basket of major currencies, causing gold to shed gains. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.25 percent to 958.37 tonnes on Monday.