Gold flat as traders assess Fed rate hike path

Gold was little changed on Tuesday, as the dollar steadied after seeing its biggest jump in two weeks in the previous session, while worries about bigger rate hikes by the U.S. Federal Reserve lingered.

Spot gold GOLD held its ground at $1,769.99 per ounce as of 0553 GMT. U.S. gold futures GOLD were unchanged at $1,781.20.

"Gold prices have been tracking the dollar moves closely," said IG Market strategist Yeap Jun Rong.

"With market trying to seek clarity on Fed's rate hike plan, rate expectations have been sensitive to incoming economic data. Signs of stronger-than-expected demand may lead markets to revisit more hawkish expectations."

One such instance was on Monday when data showed that U.S. services industry activity unexpectedly picked up in November, with employment rebounding, offering more evidence of underlying economic momentum.

Bullion dropped from a five-month high to close 1.6% lower as the dollar rebounded after the data prompted speculation the Fed may lift rates more than recently projected.

Higher interest rates tend to weigh on gold's appeal as they increase the opportunity cost of holding the non-yielding metal.

Spot gold may bounce to $1,783 per ounce, before resuming its fall towards $1,766, Reuters technical analyst Wang Tao said.

Investors also took stock of news that COVID-19 cases in top bullion consumer China dropped and cities across the country ease restrictions and testing requirements.

Meanwhile, British consumer spending ticked up last month at a rate that greatly lagged behind inflation, according to surveys.

Spot silver XAGUSD1! climbed 0.5% to $22.37. Platinum PL1! was up 0.1% to $998.63 and palladium XPDUSD1! gained 0.5% to $1,885.75.