Gold held steady near a five-month peak on Tuesday as expectations for fewer interest rate hikes by the US Federal Reserve next year supported the non-yielding precious metal. Palladium briefly traded above gold earlier in the session, with prices of the autocatalyst metal rising more than 2 percent after US President Donald Trump tweeted that China had agreed to cut import tariffs on American-made cars.
Palladium prices last week briefly surpassed gold for the first time since 2002.
Spot gold was little changed at $1,243.34 per ounce as of 1:53 p.m. EST (1853 GMT). It touched its highest level since July 11 at $1,250.55 in the prior session.
US gold futures settled down $2.20, or 0.18 percent, at $1,247.20 per ounce.
"We are in a situation where the US Federal Reserve is starting to signal they may be very close to neutrality, which means just a few more interest rate hikes," said Bart Melek, head of commodity strategies at TD Securities.
The market is interpreting this as lower interest rates in 2019 and 2020."
Lower interest rates reduce the opportunity cost of holding bullion and weigh on the dollar.
Gold investors are awaiting the Fed meeting on Dec. 18-19, where the central bank "could have more dovish language and cautious approach to future hikes," said George Gero, managing director at RBC Wealth Management.
Speculators trimmed their net short positions in Comex gold contracts in the week to Dec. 4, data showed on Monday.
"There remains significant scope for the market to further increase long positions and to further reduce short positions," Societe Generale said in a note.
Spot silver fell 0.3 percent to $14.49 per ounce, having touched $14.72 an ounce earlier, its highest level since Nov. 7.
Platinum was 0.7 percent lower at $779.74 per ounce. Prices had slipped to their lowest since Sept. 10 at $773.50 in the previous session.