Gold came off its highs on Tuesday, as the dollar advanced after US Federal Reserve Chair Janet Yellen said the central bank will likely need to raise interest rates at an upcoming meeting with the economy expanding further. The Federal Reserve chair struck a more hawkish tone than investors had expected, although she did flag considerable uncertainty over economic policy under the new administration.
US President Donald Trump's national security adviser Michael Flynn resigned on Tuesday over revelations that he had discussed US sanctions against Moscow with the Russian ambassador before Trump took office.
Spot gold traded 0.4 percent higher at $1,229.49 an ounce by 2:36 pm EST (1936 GMT), while US gold futures settled down 0.03 percent at $1,225.40. "Yellen is trying to nudge the expectations for a rate hike in March higher. This doesn't mean they will move in March, but the Fed wants to have the option to move," said Omer Esiner, chief market strategist at Commonwealth Foreign Exchange Inc. On the upside for gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.49 percent to 840.87 tonnes on Monday. Gold has rallied nearly 10 percent since touching 10-month lows in December. In other precious metals, spot silver rose 1 percent to $17.97, having hit its highest since November 11 above $18 earlier. Palladium gained 1 percent to $782.40 while platinum was up 0.6 percent at $1,001.20.