Investing.com - Gold prices edged higher in European trade on Tuesday, recovering from the prior session's six-week low as market players looked ahead to comments from Federal Reserve Chair Janet Yellen for further signs of the central bank's likely rate hike trajectory through the end of the year.
Comex gold futures were at $1,251.60 a troy ounce by 3:05AM ET (0705GMT), up $5.10, or around 0.4%. It fell to its lowest since May 17 at $1,236.50 a day earlier.
Gold fell sharply Monday, with prices marking their first decline in four sessions, as a large sell order and a stronger dollar hit sentiment.
Also on the Comex, silver futures ticked up 6.5 cents, or roughly 0.4%, to $16.63 a troy ounce, recovering from the prior session's seven-week low of $16.22.
Fed Chair Janet Yellen is due to speak about global economic issues at the British Academy's 2017 President's Lecture in London at 1:00PM ET (1700GMT) on Tuesday. Audience questions are expected.
Her comments will be monitored closely for any new insight on policy and the timing of when the Fed will next raise interest rates. The Fed chair could be asked about the U.S. central bank's plan to start shrinking its massive balance sheet, which ballooned to $4.5 trillion in wake of the financial crisis.
Besides Yellen, a pair of Fed policymakers are due to make public appearances on Tuesday that may offer further insight into the debate among policymakers on the likelihood of higher interest rates in the months ahead.
Philadelphia Fed President Patrick Harker is set to speak about the economic outlook and international trade at the European Economics & Financial Centre, in London, while Minneapolis Fed Chief Neel Kashkari will speak at a town hall event in Michigan.
The Fed raised interest rates for the second time this year earlier in June and maintained plans to go ahead with another rate hike by year-end. Despite the Fed's message, market players remained doubtful over the central bank's ability to raise rates as much as it would like in the coming months due to softening inflation.
Futures traders are pricing in less than a 15% chance of a hike at the Fed's September meeting, according to Investing.com’s Fed Rate Monitor Tool. Odds of a December increase was seen at about 35%.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Among other precious metals, platinum inched up 0.7% to $924.15, while palladium added 0.3% to $866.52 an ounce.