Gold extended losses on Tuesday after posting its biggest drop in a month in the previous session, as a stronger dollar dented bullion's appeal, while investors watched for signs of further policy tightening by the U.S. Federal Reserve.
Spot gold fell 0.3% to $1,773.59 per ounce by 1239 GMT after falling more than 1% on Monday. U.S. gold futures slipped 0.4% to $1,791.10.
The dollar, also considered a safe store of value along with bullion, benefited from a disappointing set of economic data out of China and a surprise rate cut by the country's central bank. A stronger dollar makes gold more expensive for overseas buyers.
"Amidst this uncertainty, investors are finding comfort in the safety of the dollar, in a dynamic that penalises gold due to the inverted price correlation between the two," said Ricardo Evangelista, senior analyst at ActivTrades.
If the Federal Open Market Committee (FOMC) minutes on Wednesday provide signs of further hawkishness, it could enhance the appeal of the dollar and hurt gold prices more, he added. Fed officials have maintained a hawkish tone and hinted at more rate hikes this year to tame high inflation.
Rising U.S. interest rates tend to weigh on bullion, which yields no interest. Investors have also pulled out of gold exchange-traded funds and that could be weighing on gold too, Bank of China International analyst Xiao Fu said.
However, gold has been trading in a range and could be seen consolidating in the current range for the next couple of weeks due to ongoing geopolitical uncertainty and buying on dips by some of the emerging market central banks, she added.
Elsewhere, spot silver fell 1.6% to $19.94 per ounce, hitting its lowest in over a week. Palladium dropped 1.2% to $2,120.55, on track for a third consecutive session of losses. Platinum lost 0.8% to $926.09.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Rashmi Aich and Maju Samuel)