Gold prices inched higher on Wednesday as a slight pullback in US bond yields and bargain-hunting underpinned the market, although a stronger dollar and aggressive interest rate hike fears limited gains.
Spot gold edged up 0.1% to $1 702.59 per ounce by 12:07 GMT, having dropped to its lowest since September 1 at $1 690.10.
US gold futures were little changed at $1 713.30.
There might be some buying activity below $1 700, but as long as the US Federal Reserve sticks to its hawkish tone, expect gold prices to fall further, said UBS analyst Giovanni Staunovo.
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The US Federal Reserve too is largely expected to deliver a 75 basis point rate increase later this month. The US central bank has raised its benchmark overnight interest rate by 225 basis points in total since March.
Although gold is considered a hedge against inflation, rising US interest rates reduce the appeal of non-yielding bullion.
The US dollar scaled a fresh 20-year peak, making greenback-priced gold less attractive for overseas buyers. [USD/] While benchmark 10-year US Treasury yields retreated after scaling their highest since June earlier in the session.
"The $1,700 mark has been a very important level for gold in the past... But it's very difficult to be positive on gold at the moment and in the short term," said Fawad Razaqzada, market analyst at City Index.
Expect the metal to head further lower if it breaks below $1 700, Razaqzada said, noting "not looking for any gains in the near term until something fundamentally changes."
Elsewhere, spot silver rose 0.5% to $18.14 per ounce, platinum <XPT=> added 0.2% to $854.52, and palladium climbed 0.6% to $2,017.72.