Investing.com - Gold prices eased off a one-week low on Tuesday, as sentiment on the U.S. dollar became more vulnerable ahead of the State of the Union speech due later in the day and the Federal Reserve's monthly policy decision on Wednesday.
Comex gold futures were up 0.22% at $1,343.30 a troy ounce by 08:25 a.m. ET (12:25 GMT), off one-week lows of $1,332.80 hit earlier in the session.
Investors remained cautious as U.S. President Donald Trump was set speak to Congress in his first official State of the Union address later Tuesday.
Comments from the White House recently weighed on the greenback, especially after U.S. Treasury Secretary Steven Mnuchin said that a weaker dollar was positive for American trade.
However, President Trump contradicted Mnuchin's position by defending the need for a strong currency. Traders fear the U.S. administration may use currency policy as a tool to get better trade deals with other countries.
Market participants were also looking ahead to the Fed's upcoming policy decision on Wednesday for potential indications on the pace of interest rate hikes this year. The U.S. central bank is widely expected to raise rates three times in 2018.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.35% at 88.86, after rising to 89.47 earlier in the day.
Gold is sensitive to moves in the dollar. A weaker dollar makes gold less expensive for holders of foreign currency.
Elsewhere on the Comex, silver futures gained 0.43% to $17.22 a troy ounce.