Global gold prices remained volatile on Tuesday ahead of the release of minutes of the US Federal Reserve’s July meeting on Wednesday, which is expected to bring further clarity on the central bank's rollback of bullion-friendly stimulus measures.
Silver, however, slid nearly 4% in intraday trade after recording a 13% gain last week, which was its strongest weekly rally in five years.
Speculation is rife that the Fed may scale back its $85-billion monthly bond-purchase programme from as early as September as the world's biggest economy has shown signs of improvement.
Sapping initial losses, gold gained after the dollar dropped against a basket of currencies. The precious metal usually shares an inverse relation with the greenback.
Spot gold rose slightly to $1,366.14 an ounce from $1,365.48 on Monday, while COMEX December futures gained 50 cents at $1,366.20 an ounce.
Gold dropped to $1,352.20 an ounce in earlier trade, tracking a 3.7% fall in silver to $22.26 an ounce. Silver recorded gains for eight straight sessions through Friday.
However, the white metal, too, recouped some of the losses and was trading down by just 1% at $22.87 an ounce after concerns about US stimulus measures set in amid technical selling dragging the dollar down.
The dollar index dropped 0.3% and global shares tumbled to their meanest in more than a month on Tuesday on uncertainty ahead of the release of the Fed minutes on Wednesday.
"Gold may find support from optimism that India's bullion imports may resume. Meanwhile, above-average rain across most parts of India so far this monsoon season is an encouraging sign for physical gold demand later this year," HSBC said in a note.
The demand in India is expected to remain strong in the coming weeks as jewellers tend to build inventories ahead of the festival season starting October. Already gold imports rose to 47.6 tonnes in July from 31.5 tonnes in May, according to official data.
In Delhi, gold dropped further by Rs 235 to Rs 31,125 per ten grams after a Rs 165-slide on Monday. Silver, too, fell by Rs 455 to Rs 50,155 per kg after losing Rs 75 on Monday.
Gold prices moved up in recent weeks in the domestic market due to the hike in the import duty and a sharp depreciation of the rupee against the dollar. The rupee has weakened by 7.3% since July 25.
"At COMEX, the prices have given a breakout above the crucial hurdle