* Spot gold may revisit Oct. 7 low of $1,241.20 -technicals
* September Fed policy meeting minutes awaited
(Adds comment, updates prices)
By Swati Verma
BENGALURU, Oct 11 Gold prices edged lower on
Tuesday after two sessions of gains, with the U.S. dollar
strengthening amid speculation the Federal Reserve will raise
U.S. interest rates in December.
Spot gold had dropped 0.2 percent to $1,257.06 an
ounce by 0810 GMT.
U.S. gold futures fell 0.1 percent at $1,259.10 an
Gold had risen for two consecutive sessions, after first
touching a four-month low of $1,241.20 an ounce on Friday. Spot
gold ended last week about 4.5 percent lower, its biggest weekly
decline since November 2015.
"After the drastic drop, the optimistic mood in gold markets
has reduced," said Jiang Shu, chief analyst at Shandong Gold
"Gold prices will be in further decline due to a rise in the
The dollar index, which measures the greenback
against a basket of six major currencies, was up 0.3 percent at
97.213 on Tuesday.
A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies.
"The broad-based dollar strength continued to cap the upside
for (precious) metals throughout mid-morning and into early
afternoon with little in way of data to drive markets," said
Alex Thorndike, senior precious metals dealer at MKS PAMP Group,
in a market note.
The metal is highly-sensitive to increases in U.S. interest
rates, which can lift the opportunity cost of holding
Traders have priced in a 70-percent chance that the Fed will
hike rates at a Dec. 13-14 meeting, up from 66 percent early
Friday, according to CME Group's FedWatch tool.
Investors are also waiting for Wednesday's release of
minutes of the latest Federal Reserve Open Market Committee
meeting to see how close the central bank was to hiking rates
Speaking to reporters after a speech in Sydney, Chicago Fed
President Charles Evans said on Tuesday he "could be fine" with
raising U.S. interest rates in December, but that he would
prefer to see how the economy and inflation progressed before
Spot gold may revisit its Oct. 7 low of $1,241.20 per ounce,
as its bounce from this level could have completed, according to
Reuters technical analyst Wang Tao.
Among other precious metals, silver was steady at
$17.62 an ounce.
Platinum was 0.1 percent lower at $959.25 an ounce
and palladium was down 0.2 percent at $664.
(Reporting by Swati Verma in Bengaluru; Editing by Joseph
Radford and Tom Hogue)