Gold prices surged higher second day in a row this week
Gold prices bounced back on Tuesday ahead of the release of minutes of the US Federal Reserve's previous meeting that could offer clues on the pace of the central bank's interest rate hikes.
Dubai gold prices are Dh155 for 24-karat and 22-karat can be bought for Dh146.
The minutes of the Fed's last policy meeting, when it kept interest rates unchanged, will be released on Wednesday.
Spot gold was up 0.2 per cent at $1,279.67 per ounce by 0439 GMT. The metal fell about 1.4 per cent on Monday in its biggest one-day percentage drop since September 11. US gold futures for December delivery gained 0.3 per cent to $1,279.30.
"Given the fact that the December rate hike is almost a done deal, market watchers will look more closely at what is the Fed rhetoric for post December," OCBC analyst Barnabas Gan said.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
Fed Chair Janet Yellen said on Monday she would resign her seat on the Fed's Board of Governors once Jerome Powell is confirmed and sworn in to replace her as head of the US central bank.
"The fact that Yellen has now confirmed to leave is adding a little bit of volatility as traders adjust their positions while they make sense of the implications of the incoming new Fed chairman Jerome Powell in terms of interest rate direction," said Loh Mun Chun, Director, Private Wealth at GoldSilver Central in Singapore.
Traders were also keeping an eye on the geo-political front after US President Donald Trump put North Korea back on a list of state sponsors of terrorism on Monday.
"It is very hard to predict as to what Trump is going to do... We are waiting to see how North Korea reacts and whether it escalates global tensions," OCBC's Gan said.
Spot gold may break a support at $1,274 per ounce, and fall towards the Oct. 6 low of $1,260.16, according to Reuters technical analyst Wang Tao.
In other markets, the dollar gave back some of its gains in Asian trading but remained within sight of a one-week high against a basket of currencies as German political uncertainty continued to pressure the euro.
Silver rose 0.3 per cent to $16.96 an ounce and platinum was up 0.6 per cent to $928.70.