NEW YORK/LONDON (Reuters) - Gold turned slightly higher on Tuesday, as the market awaited signals of future monetary tightening by the U.S. Federal Reserve and a Senate panel's questioning of Attorney General Jeff Sessions about his dealings with Russian officials.
The Fed is widely expected to raise interest rates when it concludes its meeting on Wednesday, although investors will focus on any new hints on the pace of hikes this year and its assessment of the economy and inflation. [FRX/]
Gold prices turned higher about an hour-and-a-half before Sessions faced questions about his dealings with Russian officials and whether he intentionally misled Congress, as a Senate panel investigates alleged Russian meddling in the 2016 U.S. presidential election.
"Gold's quick recovery from under $1,260 has emboldened micro-term bulls who may see the outcome of Attorney General Jeff Sessions' testimony to likely be one-sided," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
"Whatever Sessions says won't satisfy the braying critics and there's always a chance something inflammatory drops."
Spot gold XAU= was up 0.16 percent at $1,267.10 an ounce by 2:46 p.m. EDT (1846 GMT), after hitting a session low of $1,259.16, its weakest since June 2.
U.S. gold futures GCcv1 for August delivery settled down $0.3, or 0.02 percent, at $1,268.60.
The Fed, which is scheduled to make a statement at 2 p.m. EDT (1800 GMT), may also provide more detail on its plans to shrink the mammoth bond portfolio it amassed to nurse the economic recovery.
"Obviously ahead of the meeting people aren't building significant positions. ... If anything, they're expecting a dovish Fed because recent (U.S.) economic data has been weak," said Fawad Razaqzada, analyst at FOREX.com.
A lower-than-expected pace of rate hikes would weigh on the dollar, making dollar-priced gold cheaper for non-U.S. investors. The dollar index .DXY turned lower on Tuesday. [MKTS/GLOB]
Among other precious metals, palladium XPD= edged away from a 16-year high hit on Friday, and was last down 1.4 percent at $882.80 an ounce.
"As there is no visible shortage of palladium for industrial uses, which account for more than 90 percent of demand, and car sales have been weaker-than-expected this year, we believe the rally in palladium prices is unsustainable," said Giovanni Staunovo, analyst for UBS Chief Investment Office.
Silver XAG= slipped 0.5 percent to $16.84 per ounce, having earlier hit $16.68, its lowest since May 19.
Platinum XPT= fell 1.5 percent to $925.90 per ounce.
Additional reporting by Nithin ThomasPrasad; Editing by David Evans and Richard Chang