Gold prices rebounded from a 2-1/2-year low on Tuesday as a pause in the U.S. dollar's rally helped restore greenback-priced bullion's allure, although risks from looming rate hikes persisted.
Spot gold was last 0.38% higher at $1,627.6707 per ounce, after rising over 1% to $1,642.29 earlier in the session.
U.S. gold futures advanced 0.13% to $1,635.60.
"Today is just a little bit of a recovery after some of the extreme weakness seen over recent days ... but I don't think there's really any fundamental change taking place in the gold market," said Ryan McKay, commodity strategist at TD Securities.
The dollar retreated from two-decade highs, prompting investors to turn to gold, which had fallen to its lowest since April 2020 at $1,620.20 in the previous session. A weaker dollar makes gold attractive for holders of other currencies.
Gold prices also benefited from "corrective price rebounds from recent selling pressure and on short covering from the shorter-term futures traders," Jim Wyckoff, senior analyst at Kitco Metals, said in a note.
However, gold faces pressure from aggressive interest rate hikes that tend to raise the opportunity cost of holding non-yielding bullion.
The U.S. central bank will need to raise rates by at least another percentage point this year, Chicago Fed President Charles Evans said on Tuesday.
"We're still essentially in a pretty weak environment for gold with an aggressive Fed and some Fed speakers throughout the week likely to hammer home the point that rates are going to be higher for longer," McKay added.
"We could see prices fall below the $1,600 level."
Meanwhile, spot silver gained 0.17% to $18.3662 per ounce.
"With the global electronics sector struggling and the more general global economic backdrop deteriorating, we think the silver price will remain under pressure over the rest of this year," Capital Economics wrote in a note.
Platinum dropped 0.43% to $848.35, while palladium climbed 1.19% to $2,070.3699.