Gold prices rose on Tuesday, supported by weakness in the US dollar index, though receding worries about the outcome of the US election and expectations of a US rate increase in December could mean lower levels. Spot gold was up 0.6 percent at $1,262.84 an ounce at 2:49 pm EDT (1849 GMT), holding just below the 200-day moving average. US gold futures settled up 0.50 percent at $1,262.90.
The US currency fell by as much as 0.3 percent, prior to paring losses as it retreated from Monday's seven-month high against a basket of currencies, making dollar-denominated gold cheaper for holders of other currencies. US consumer prices rose in September, suggesting a steady build-up of inflation pressures that could keep the Fed on track to raise interest rates in December.
According to CME Group's FedWatch program, the chances of the US Fed hiking rates in December are about 70 percent. A rate hike is typically a source of pressure for bullion prices. "People are waiting for December to see what happened with the Fed, over the next month or so there could be a little more downside," Warren Patterson, commodity strategist at ING, said. "There's also more optimism that Hillary Clinton will probably win the election." Silver was up 1 percent at $17.61 an ounce, while palladium was up 0.5 percent at $640, up from Friday's three-month low. Platinum rose 0.9 percent to $945 an ounce, up from a 7-1/2-month low of $923 reached on Monday.