LONDON: Gold prices rose on Tuesday after hitting a five-week low as the dollar steadied after reaching a 3-week peak following hawkish comments from an influential US Federal Reserve official.
New York Fed President William Dudley said on Monday that labour market tightness should help drive up inflation, reinforcing the message that recent weak data is unlikely to derail plans to keep raising interest rates.
The greenback had a further lift on Tuesday following dovish comments from Bank of England Governor Mark Carney, but later gave back gains to trade little changed versus a basket of major currencies.
"It (another rate hike) is not entirely unlikely. Gold from now to the end of the year could see slight drops, especially if (on top of Fed hikes) the European Central Bank starts tapering its bond buying programme," said Natixis analyst Bernard Dahdah.
Spot gold rose 0.3 percent to $1,246.60 per ounce by 1206 GMT, after earlier touching a low of $1,242.61 an ounce, the weakest since May 17.
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