Gold prices jumped more than 1% on Tuesday, as the dollar and U.S. Treasury yields slipped on expectations the Federal Reserve will temper its rate-hike stance from next month.

Spot gold was up 1.4% at $1,655.98 per ounce by 1225 GMT, its best day since Oct. 21. U.S. gold futures advanced 1.2% to $1,659.50.

The dollar index slipped from a one-week high against its rivals, making bullion less expensive for overseas buyers, with lower benchmark 10-year Treasury yields also lending support to gold.

While a slight softening in yields alongside the dollar is beneficial for gold prices, whether the trend can be sustained depends on "the much-craved dovish signal from the Fed, which looks set to hike by 75 basis points once more," said Craig Erlam, senior market analyst at OANDA.

"Although expect any dovish messaging to be heavily caveated," Erlam said, adding "gold seems to have found a floor around $1,600 but that won't last long if the Fed throws out another hawkish hike."

The U.S. central bank is seen debating when to switch to smaller hikes at its two-day policy meeting that ends on Wednesday.

Gold prices have declined about 21% since rising past the $2,000 per ounce level in March, due to rapid rate hikes from the Fed, posting a seventh straight monthly loss in October.

Higher U.S. interest rates increase the opportunity cost of holding the non-yielding bullion.

There is also renewed risk appetite in markets, and it will likely cause an important move higher in equities and growth-linked currencies and also gold, which has been moving in line with the broader risk sentiment, said Daniela Hathorn, analyst at

Spot silver jumped 4.3% to scale a three-week peak of $19.97 per ounce.

Platinum rose 2.3% to $947.13, while palladium advanced 3.8% to $1,911.63.

(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru; Editing by Vinay Dwivedi)