Investing.com - Gold prices edged lower on Tuesday, as the U.S. dollar bounced back toward its 14-year high against a basket of major currencies with markets focused on the possibility of further U.S. interest rate hikes next year.
Gold for February delivery on the Comex division of the New York Mercantile Exchange shed $7.95, or 0.7%, to $1,134.75 a troy ounce by 3:25AM ET (08:25GMT), after rising $5.30, or 0.47%, in the prior session.
Prices of the yellow metal sank to $1,124.30 last week, a level not seen since February 2.
The dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.25% at 103.32 in early trade, coming within sight of its 14-year peak of 103.55 touched last week.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Optimistic remarks on the U.S. labor market by Federal Reserve Chair Janet Yellen strengthened the possibility of further rate hikes next year.
Speaking at the University of Baltimore's midyear commencement ceremony Monday, Yellen said recent improvements in the economy have created one of the strongest job markets in years for graduates.
The speech came a few days after the U.S. central bank hiked interest rates for the first time in a year and projected three more increases in 2017, up from the two projected in September.
Market analysts warned that the outlook for gold remains cloudy in the near-term, given expectations for higher U.S. interest rates in the months ahead.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Also on the Comex, silver futures for March delivery dipped 18.7 cents, or 1.16%, to $15.90 a troy ounce during morning hours in London, after falling to $15.83 earlier, the lowest since April 11.
Meanwhile, platinum slipped 0.2% to $915.50 and palladium dropped 1.44% to $668.92 an ounce.
Elsewhere in metals trading, copper futures declined 0.7 cents, or 0.3%, to $2.492 a pound.