Investing.com - Gold prices turned lower on Tuesday, as the U.S. dollar strengthened ahead of a highly-awaited speech by Federal Reserve Chair Janet Yellen scheduled later in the day.
Comex gold futures were down $8.92 or about 0.69% at $1,302.60 a troy ounce by 08:45 a.m. ET (12:45 GMT).
Chair Janet Yellen was due to deliver a speech titled "Inflation, Uncertainty, and Monetary Policy" at the National Association for Business Economics' Annual Meeting in Cleveland at 12:45PM ET (16:45GMT) on Tuesday.
Her comments will be monitored closely for any new insight on policy. Last week, the U.S. central bank announced it would begin trimming down its $4.5 trillion in assets and signaled it will likely raise rates again this year.
The greenback had strengthened after New York Federal Reserve President William Dudley on Monday said the Fed is on track to gradually raise interest rates given factors depressing inflation are "fading" and the U.S. economy's fundamentals are sound.
“I expect inflation will rise and stabilize around the (Fed's) 2% objective over the medium term," he said before adding that "in response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually."
However, Chicago Federal Reserve Bank President Charles Evans said shortly after that the U.S. central bank should wait until there are clear signs that income and prices are rising before raising interest rates again, warning that moving too fast would be a policy “misstep.”
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, wasup 0.45% at 92.87,the highest since August 31.
Gold is sensitive to moves higher in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
But the precious metal's losses were capped by fresh geopolitical tensions between the U.S. and North Korea.
North Korea's foreign minister Ri Yong Ho said on Monday that President Donald Trump had declared war on the country and that Pyongyang reserved the right to shoot down U.S. bombers, even if they are not in its air space.
Elsewhere on the Comex, silver futures declined 0.76% to $17.01 a troy ounce.