The metal is heading for a 2.8 percent drop in August.
Spot gold was $1,314.16 an ounce at 0932 GMT, up 0.3 percent, having slipped 1 percent in the previous session to touch a two-month low of $1,308.65.
Stock futures struggled for traction on Monday after last week’s speech by Federal Reserve Chairwoman Janet Yellen revived expectations that the central bank could raise interest rates by the end of this year.
Gold has fallen to a two-month low after forecast-beating U.S. jobs data stoked speculation that the Federal Reserve will move ahead with plans to raise its official interest rate, briefly propelling the USA dollar index to its highest in three weeks.
While downside risks remain for the dollar in the run-up to the November election, a smaller sample of strategists who answered an extra question said the US currency would benefit most if Democratic Party candidate Hillary Clinton is voted president. Fischer added in an interview on Tuesday that the US job market is almost at full strength. Fischer spoke again on Tuesday and repeated that USA employment is strong and that a “one and done” rate hike cycle is not something central banks like the Fed tend to engage in.
“The rising dollar and United States real rates have also been creating headwinds”.
“Stocks are extended and not cheap, and there’s no immediate catalyst other than momentum to make stocks go higher”, said Jim Awad, managing director at Plimsoll Mark Capital in NY, on the dip in U.S. shares overall.
Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, are down 2.7 tonnes in August, compared with an inflow of 8 tonnes in July.
The pace of rate hikes is heavily dependent on USA economic data.
The US dollar continued higher on Tuesday, as traders looked ahead to upcoming jobs data.
Payrolls processor ADP Inc. will release its monthly estimate of private sector job creation on Wednesday. An upbeat payrolls report would reinforce the view that a USA rate hike may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend.
“Private payroll data out of the USA will help to give the market some direction”, MKS said in a note. “However, it’s unlikely we will see gold move outside of $1,300”.
The dollar index eased 0.1 percent on Wednesday.
Silver rose 1 percent to $18.77 an ounce. USA gold futures for December delivery settled down 0.8% at $1,316.5 per ounce.