Gold dips as dollar attempts recovery

Gold dips as dollar attempts recovery

Gold edged lower on Tuesday, as the U.S. dollar rebounded slightly after a slide in the previous session, weighing on demand for greenback-priced bullion.

Spot gold fell 0.2% to $1,850.40 per ounce, as of 0240 GMT, after rising to its highest since May 9 of $1,865.29 on Monday. U.S. gold futures were flat at $1,848.20.

The safe-haven dollar clawed back some of its overnight losses. A stronger dollar makes bullion more expensive for overseas buyers.

"The weaker dollar has helped gold break back above its 200-day average... and we're not yet convinced the greenback has seen a low," City Index senior market analyst Matt Simpson said.

Kansas City Federal Reserve Bank President Esther George said on Monday she expects the U.S. central bank to lift its target interest rate to about 2% by August, with further action dependent on how both supply and demand are affecting inflation.

Bullion, seen as a safe store of value during times of economic crises, tends to become less attractive to investors when U.S. interest rates are raised because it yields nothing.

"Gold continues to look oversold to my eyes and the daily close (on Monday) above the 200-day average is constructive for bulls," Simpson said.

SPDR Gold Trust , the world's