(Reuters) - Spot gold was flat at $1,771.00 per ounce, as of 0228 GMT, after hitting its highest since Aug. 17 on Monday.
U.S. gold futures edged 0.2% lower to $1,774.30 per ounce.
"Gold has had a very strong run from $1,618 per ounce and is now due for some consolidation short term. However, the overall dominant risk remains very much to the upside," said Clifford Bennett, chief economist at ACY Securities.
"The catalyst for the recent strong rally was partially the correction of the U.S. dollar."
Gold prices have risen $150 or nearly 10% since falling to a one-month low earlier this month as data showing an uptick in U.S. unemployment rate in October and sings of cooling inflation led to Fed slowdown optimism.
The Fed will likely soon slow its interest rates hikes, Fed Vice Chair Lael Brainard signalled on Monday, but emphasised the central bank still had more work to do.
Traders now see an 89% probability of a 50-basis-point increase at the U.S. central bank's December meeting, with only an 11% likelihood of a 75-basis-point rise.
While gold is considered a hedge against inflation, rising interest rates tend to dull bullion's appeal as the metal pays no interest.
Capping the gains, the dollar index rose 0.3% against its rivals, making gold more expensive for other currency holders.
Speculators cut net short positions by 30,659 contracts to 8,219 in COMEX gold in the week to Nov. 8, the U.S. Commodity Futures Trading Commission said.
Spot silver rose 0.2% to $22 per ounce. Platinum gained 0.2% to $1,019.50, while palladium was steady at $2,025.U.S. gold futures edged 0.2% lower to $1,774.30 per ounce.
"Gold has had a very strong run from $1,618 per ounce and is now due for some consolidation short term. However, the overall dominant risk remains very much to the upside," said Clifford Bennett, chief economist at ACY Securities.
"The catalyst for the recent strong rally was partially the correction of the U.S. dollar."
Gold prices have risen $150 or nearly 10% since falling to a one-month low earlier this month as data showing an uptick in U.S. unemployment rate in October and sings of cooling inflation led to Fed slowdown optimism.
The Fed will likely soon slow its interest rates hikes, Fed Vice Chair Lael Brainard signalled on Monday, but emphasised the central bank still had more work to do.
Traders now see an 89% probability of a 50-basis-point increase at the U.S. central bank's December meeting, with only an 11% likelihood of a 75-basis-point rise.
While gold is considered a hedge against inflation, rising interest rates tend to dull bullion's appeal as the metal pays no interest.
Capping the gains, the dollar index rose 0.3% against its rivals, making gold more expensive for other currency holders.
Speculators cut net short positions by 30,659 contracts to 8,219 in COMEX gold in the week to Nov. 8, the U.S. Commodity Futures Trading Commission said.
Spot silver rose 0.2% to $22 per ounce. Platinum gained 0.2% to $1,019.50, while palladium was steady at $2,025.