Gold edged lower early on Tuesday as the dollar recovered and global shares rose, but uncertainty about the timing of a US interest rate increase kept bullion not far from a seven-week high above $1,200 an ounce. Bullion hit its highest since February 17 at $1,224.10 on Monday, supported by a weakening dollar after US nonfarm payrolls data fueled expectations that the Federal Reserve could delay an anticipated rate rise this year.
"Bulls are frustrated yet again to see rallies fade ... momentum buying is mostly seen as an opportunity to sell into," bullion broker Sharps Pixley Chief Executive Ross Norman said.
Spot gold was down 0.5 percent at $1,208.55 an ounce by 2:24 pm EDT (1824 GMT), while US gold for June delivery slipped 0.7 percent to settle at $1,210.60 an ounce.
The dollar rose 0.8 percent versus a basket of currencies, aided by higher Treasury yields. Stock markets around the world also advanced as investors moved into riskier assets for a second straight day, denting gold's appeal as insurance against risk.
A stronger greenback makes dollar-denominated bullion more expensive for holders of other currencies, while returns on US bonds are closely watched by the gold market, given that the metal pays no interest.
Gold is likely to continue to depend on movements in the dollar and expectations of higher US interest rates, ActivTrades chief analyst Carlo Alberto de Casa said.
New York Fed President William Dudley said late Monday that the timing of a US interest rate rise is unclear but on Tuesday, Minneapolis Fed President Narayana Kocherlakota laid out a case for waiting until the second half of 2016 to start raising interest rates.
"Gold hasn't responded to the Fed's doctrinaire dove, considering him an outlier, though he may well be parsing aloud what the majority is thinking," said director of base and precious metals trading for BMO Capital Markets in New York, referring to Kocherlakota.
Asian physical demand remains tepid at current levels.
The premium for physical gold on the Shanghai Gold Exchange was less than a dollar an ounce over the global spot benchmark, down from around $2-$3 last week as Chinese buyers returned from a long holiday weekend.
Spot silver fell 1.1 percent to $16.79 an ounce, while platinum lost 0.4 percent to $1,168.98 an ounce and palladium was flat at $767.50 an ounce.
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