Reuters – Gold was slightly higher on Tuesday, just up from its lowest in nearly five months in the previous session, and ahead of the start of a two-day US Federal Reserve meeting.
Spot gold rose 0.2% to $1,244.25 an ounce as at 0715 GMT, after hitting its lowest since July 20 at $1240.10 on Monday.
“The overnight drop I suspect is continued long liquidation as evidenced in the weekends Commitment of Traders Report” said Jeffrey Halley, senior market analyst with OANDA.
CFTC data from Friday showed speculators sharply cut their net long positions in gold to the lowest since early August due to recent price weakness.
“I would expect gold to remain offered on any rally and ...to retest its overnight lows around $1,240," Halley said, adding that a hawkish statement on US interest rates from the Federal Open Market Committee could see gold under further pressure.
The dollar was steady near a recent two-week high versus a basket of major currencies, as traders awaited results from the US Fed's policy meeting for a fresh catalyst.
At the meeting, which concludes on Wednesday, the US central bank is widely expected to raise benchmark interest rates for the third time this year and comment on the pace of further rate hikes.