Investing.com - Gold prices edged higher on Tuesday, but stayed within sight of the prior session's two-week lows as markets continued to grapple with uncertainty over who will become the next Federal Reserve chief and how that will influence the outlook for interest rates.
President Donald Trump told reporters on Monday he is "very, very close" to deciding who should chair the Federal Reserve after interviewing five candidates for the position.
These include current Fed Chair Janet Yellen, whose term expires in February, as well as Fed Governor Jerome Powell, Stanford University economist John Taylor, Trump's chief economic advisor Gary Cohn, and former Fed Governor Kevin Warsh.
The U.S. dollar index held near a two-week high against the other major currencies, while bond yields remained supported near their recent peaks, dampening the appeal of bullion.
Comex gold futures tacked on $2.30, or around 0.2%, to $1,283.26 a troy ounce by 2:35AM ET (0635GMT) after touching its worst level since Oct. 6 at $1,273.60 in the last session.
The yellow metal recovered from an early decline to eke out a small gain on Monday as stocks lost some steam after a run to another round of all-time highs.
Interest rate futures are pricing in around a 90% chance of a December Fed rate hike according to Investing.com's Fed Rate Monitor Tool. The U.S. central bank has already raised rates twice this year.
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.
Elsewhere on the Comex, silver futures inched up 6.5 cents, or 0.4%, to $17.14 a troy ounce. Among other precious metals, platinum added 0.2% to $929.25, while palladium rose 0.8% to $960.65 an ounce.
Meanwhile, copper futures rallied 3.7 cents, or 1.2%, to $3.221 a pound. It hit its best level since Aug. 2014 at $3.239 earlier, boosted by expectations of strong economic growth in China, the world's top user of the red metal.