- The Fed will go for its fourth consecutive 75 basis point interest rate hike on Nov. 2, according to economists polled by Reuters
- Analysts said the central bank should not pause until inflation falls to around half its current level.
Gold prices edged higher on Tuesday, propped up by a pullback in the dollar, while investors awaited further cues on the U.S. Federal Reserve's interest rate-hike path.
Spot gold rose 0.3% to $1,653.28 per ounce, as of 0059 GMT, while US gold futures were up 0.2% at $1,657.70.
The dollar index eased 0.1%, making greenback-priced gold less expensive for overseas buyers.
US business activity contracted for a fourth straight month in October, the latest evidence of an economy softening in the face of high inflation and rising interest rates.
The Fed will go for its fourth consecutive 75 basis point interest rate hike on Nov. 2, according to economists polled by Reuters, who said the central bank should not pause until inflation falls to around half its current level.
Although gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the zero-yield bullion, while boosting the dollar and bond yields.
Top gold consumer, China's economy rebounded at a faster-than-anticipated clip in the third quarter, but a more robust revival in the longer term will be challenged by persistent COVID-19 curbs, a prolonged property slump and global recession risks.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 0.29 tonnes to 928.39 tonnes on Monday.
Spot silver rose 0.4% to $19.33 per ounce, platinum was flat at $925.00 and palladium rose 0.7% to $1,982.33.