Investing.com - The dollar's relative stability, despite expectations of a friendlier 2019 Fed for risk assets, isn't helping gold bugs.
Futures settled down for a second day in a row Tuesday after climbing earlier in the session on Brexit anxieties and speculation that the Federal Reserve will hold on raising rates after a widely expected hike next week, which would be its fourth for this year.
Benchmark COMEX gold futures for February settled down $2.20 at $1,247.20 per troy ounce. Earlier in the session, it reached $1,255, closing in on Monday's five-month high $1,256.60, before being overwhelmed by the dollar's surge in late trading.
The dollar lost some its upward momentum over the past two weeks on dovish signals from the Fed, although it has picked up pace again this week.
By 2:10 PM ET (19:10 GMT), the U.S dollar index, a contrarian trade to bullion, was up 0.2% at 97.395.
"We actually think that the days of the dollar’s reign as King of FX could be numbered," Fawad Razqzada, technical analyst for the currency at forex.com, wrote in a commentary on Tuesday.
"However, at this stage, we are merely on the lookout for bearish fundamentals and indeed price patterns to potentially emerge on the currency. So far, we haven’t observed any significant reversal signals on the greenback."
Still, some were betting on a gold rally if the upcoming Dec. 18-19 Fed meeting reinforced market expectations of a hold on further rate hikes.
"Should the the Fed signal a cautious approach for 2019 hikes, that could be the catalyst needed to see gold break out toward $1,300/oz," TD Securities said in a note this week.
Gold's rise earlier in the day was helped by Britain's continuing crisis over its exit plans from the EU and signs that Prime Minister Theresa May might not survive her term in office.
Among other precious metals on COMEX, silver rose 0.2% to $14.63 per ounce.
Palladium jumped 1.2% to $1,172.80 per ounce, while sister metal platinum rose 0.4% to $784.80.
In base metals, COMEX copper gained 1.6% to $2.76 per pound.