NEW YORK: Gold rose on Tuesday as the dollar gave up some gains, while investors positioned for US inflation readings later this week for cues on the Federal Reserve’s interest rate hike trajectory.

Spot gold rose 0.5% to $1,850.07 per ounce by 1:41 p.m. EDT (1741 GMT). US gold futures settled 0.5% higher at $1,852.10.

Bolstering gold’s appeal for overseas buyers, the dollar index slipped off highs.

RJO Futures senior market strategist Bob Haberkorn attributed gold’s gains to bargain-hunting after initial dips below the $1,850 level and the slight retreat in the dollar.

“But the market knows gold seems to be limited on its upside right now, waiting to see how aggressive the Fed’s going to be or if they issue any new statements,” Haberkorn added.

Investors await inflation data due Friday for clues on the Federal Reserve’s rate hike trajectory. A half-point increase is expected on June 14-15.

Although gold is considered an inflation hedge, interest rate hikes remain a potential headwind since that translates into higher opportunity cost of holding non-yielding bullion.

“Gold traders tend to read central bank meetings and monetary policy moves as a double-edged sword,” said Jim Wyckoff, senior analyst at Kitco Metals.

Meanwhile, the US Treasury Department has made clear that gold-related transactions involving Russia may be sanctioned, and is closely monitoring any efforts to circumvent sanctions, Treasury Secretary Janet Yellen said.

Platinum fell 0.8% to $1,009.50 per ounce and palladium fell 1.2% to $1,979.69. Silver rose 0.3% to $22.13.

“The lack of a real recovery in auto production will continue to place downward pressure on palladium prices,” Capital Economics wrote in a note.

“Surprisingly, platinum is outperforming palladium currently. However, we expect this trend to flip through to the end of the year as supply of platinum from South Africa ramps up.”