Gold was mostly unchanged yesterday after hitting a two-week low in the previous session as the market waited for more clues from the United States Federal Reserve later this week on whether it will raise rates this year.
Spot gold was nearly flat at US$1,338.86 an ounce at 2pm, Singapore time. The metal hit a two-week low of US$1,331.35 on Monday. US gold was unchanged at US$1,343 an ounce.
"People are worried that a September rate hike is not completely ruled out as a possibility.
"Although the medium- to long- term prospects for a series of rate hikes are not really high, there should be some short-term pressure on gold," said Mr Mark To, head of research at Hong Kong's Wing Fung Financial Group.
"The exchange-traded funds have not risen significantly and that should be a short-term bearish signal for gold," Mr To said, adding that gold might soon test the level of US$1,280 to US$1,300.
Spot gold may revisit its Aug 22 low of US$1,331.35 per ounce, as suggested by its wave pattern and a triangle, according to Reuters technical analyst Wang Tao.
US Fed chair Janet Yellen may provide more clarity on an interest rate increase in a speech during an annual meeting of central bankers in Wyoming, starting on Thursday.
The Fed last week sent mixed messages on an increase in its July meeting minutes, though some members have suggested rates could rise as soon as next month.
"We likely will see more weakness in the precious group, at least until Fed chair Yellen provides a little more clarity about the future course of interest rates on Friday," INTL FCStone analyst Edward Meir said in a note.
Gold is highly sensitive to rising US interest rates, which boost the opportunity cost of holding non- yielding gold, while lifting the dollar, in which it is priced.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.25 per cent to 958.37 tonnes on Monday.