Investing.com - Gold prices rose on Tuesday, as the U.S. dollar pulled back from the prior session's eight-month high.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.4% to 99.87, off Monday's eight-month peak of 100.35.
Gold prices often move inversely to the U.S. dollar, as the precious metal becomes less expensive for buyers using other currencies.
Gold for February delivery on the Comex division of the New York Mercantile Exchange tacked on $4.80, or 0.45%, to trade at $1,070.10 a troy ounce during European morning hours. A day earlier, prices rose $9.10, or 0.86%, boosted by a round of short-covering.
Gains were limited as market players braced for a hike in interest rates by the Federal Reserve later this month. Gold fell to $1,051.60 on Friday, the lowest since February 2010.
The yellow metal slumped approximately 7% in November, amid mounting expectations the Fed will raise rates for the first time in nearly a decade at its mid-December meeting.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for November, the last jobs report before the Fed decides on interest rates at its December 15-16 meeting.
Market players will also pay close attention to a speech by Fed Chair Janet Yellen on Wednesday and congressional testimony on Thursday.
The outcome of Thursday’s European Central Bank meeting will also be in focus amid speculation the central bank could ramp up its monetary stimulus program.
Meanwhile, silver futures for December delivery inched up 7.0 cents, or 0.5%, to trade at $14.12 a troy ounce. Prices hit $13.85 last week, the weakest since August 2009.
Elsewhere in metals trading, copper edged higher on Tuesday, after a pair of disappointing manufacturing reports underlined concerns over the health of China's economy.
The downbeat data reinforced the view that the economy remains in the midst of a gradual slowdown which will require Beijing to roll out more support in coming months.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.