KONTAN.CO.ID - LONDON. Gold prices gained on Tuesday, as the dollar paused after it rallied to a two-decade high, while investors shifted their attention to U.S. inflation data for cues on the U.S. Federal Reserve's monetary policy strategy. 

Spot gold was up 0.2% at $1,856.76 per ounce by 9:59 EDT (1359 GMT). The uptick came after prices fell about 1.7% on Monday on the dollar's strength. 

U.S. gold futures fell 0.2% to $1,854.60. The dollar index was flat after touching a 20-year high in the previous session. The benchmark 10-year U.S. Treasury yields were off 3-1/2-year peaks. 

"The gold market is on reversal and trying to stabilize right now," said Bob Haberkron, RJO Futures senior market strategist. 

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The Fed's aim of bringing inflation down without derailing the economy is challenging but doable amid heightened uncertainty caused by the war in Ukraine and COVID-19 pandemic, New York Fed President John Williams said. 

"Williams' comments have sown some doubts about how hawkish the Fed is going to be... His comments reflect a little pull back from the hawkishness (with regards to) the rate hikes moving forward," Haberkron added. 

Gold is considered a hedge against inflation and economic uncertainties. However, it is highly sensitive to rising U.S. interest rates, which raise the opportunity cost of holding non-interest bearing bullion. 

Investors now await the U.S. consumer price index (CPI) data due on Wednesday, for any impact it could have on the Fed's rate hike plans. 

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"From a technical perspective, the key $1,850 level has now held on several occasions, so that's just attracting some short-covering," Saxo Bank analyst Ole Hanse said. 

Wall Street's main indexes were set to open higher after a three-day selloff on concerns over aggressive monetary tightening and slowing economic. 

Spot silver rose 0.3% to $21.86 per ounce, platinum gained 2.6% to $980.60 and palladium fell 1.7% to $2,060.92. 

Editor: Tendi Mahadi