Gold prices edged higher on Thursday, helped by a slight dip in the dollar, although US Federal Reserve Chair Jerome Powell's hawkish remarks limited further gains in zero-yielding bullion.
Spot gold rose 0.2% to $1,638.32 per ounce, as of 0118 GMT, after falling 0.8% on Wednesday. US gold futures fell 0.6% to $1,640.70.
The dollar index edged 0.2% lower, after touching its highest level since Oct. 24 earlier at 112.19.
The Fed raised interest rates by 75 basis points on Wednesday and said its battle against inflation will require borrowing costs to rise further, yet signaled it may be nearing an inflection point.
Powell, in a press conference, said the Fed has "ways to go with interest rates before we get to the level that's sufficiently restrictive" and that it is "premature to discuss pausing."
Although gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the non-yielding asset.
The European Central Bank "will need additional interest rate increases" to fight off inflation, policymaker Pablo Hernandez de Cos said on Wednesday.
A Reuters poll showed that gold prices will average $1,712.50 an ounce next year, rising from current levels, as an end to U.S. interest rate rises is expected to revive investor interest in bullion.
Analysts and traders downgraded their forecasts for platinum and palladium prices for 2023 as a global economic slowdown reduces demand.
Spot silver rose 0.3% to $19.33, platinum rose 0.6% to $935.98 and palladium edged 0.3% higher to $1,860.08.