Gold rose on Tuesday after hitting a six-week low in the previous session as bargain hunting set in and the dollar fell before speeches by U.S. Federal Reserve officials.
Fed officials have signaled that they plan to continue on their current trajectory of interest rate hikes despite a slow down in inflation. However, investors are skeptical and market pricing shows only a 40 percent chance of a rise in December.
A huge sell order totaling 1.85 million ounces pushed gold to a six-week low on Monday, although the precious metal ultimately failed to break below the 200-day moving average.
"If yesterday gold wasn't able to push below the 200-day moving average that's a positive sign," said ABN Amro analyst Georgette Boele. "The market is skeptical about Fed rate rises this year and next. Overall we're optimistic about the outlook for gold, we (see) a weaker dollar later in the year," she added.
Spot gold rose 0.34 percent to $1,248.23 per ounce. It hit a near six-week low of $1,236.46 on Monday. U.S. gold futures for August settled at 1246.90, up 50 cents.
Fed Chair Janet Yellen addresses the British Academy in London on Tuesday, less than two hours after an address by Philadelphia Fed President Patrick Harker in the same city.
Ahead of that, the dollar slipped 0.63 percent against major currencies, making dollar-priced gold cheaper for non-U.S. investors. In Asia, today traders were still trying to ascertain the reason for Monday's sharp sell-off, MKS said in a note.
"It will be interesting to see whether gold can continue higher today," the trade house added. Gold prices have gained every month this year save June, thanks partly to rising geopolitical tensions which most recently included a bailout of Italian banks, the policies of U.S. President Donald Trump and Britain's negotiations to quit the European Union.
"We are still keeping an eye out on geopolitical tensions. Increased uncertainty in the near term should actually push gold up," said OCBC analyst Barnabas Gan. Spot gold may drop back toward $1,172 in three months, as suggested by its wave pattern and a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver rose 0.47 percent to $16.633 an ounce, while palladium fell 0.52 percent to $860.50 per ounce. Platinum rose 0.89 percent to $919.10, recovering from Monday's six-week trough.