Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as traders reacted to Federal Reserve Chairwoman Janet Yellen's speech on Tuesday.
The most active gold contract for March delivery fell 0.4 U.S. dollars, or 0.03 percent, to settle at 1,225.40 dollars per ounce.
Chairwoman Yellen's testimony before the U.S. Congress came and went without any major news. She did not mention any specific dates for a rate hike.
Investors believe the Fed may raise rates from 0.75 to 1.00 during the May FOMC meeting at the earliest.
According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 18 percent at the March meeting and 41 percent for the May meeting.
Gold was put under pressure as the U.S. Department of Labor released its producer price index report on Tuesday showing the PPI-FD increasing by 0.6 percent during the month of January.
Analysts note that this report showed inflation which is a good sign for the U.S. economy because it will mean a Fed rate increase sooner rather than later.
The U.S. central bank has seen significant strength in employment and has just been waiting for inflation to catch up.
The precious metal was put under further pressure as the U.S. Dollar Index rose by 0.23 percent to 101.25. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
All of these factors combined to gold retaining its sharp losses from the trading day on Monday.
Traders looking to the rest of this week for the consumer price index, retail sales report, and industrial production report are expected on Wednesday.
Housing starts, jobless claims, and Philadelphia Fed business outlook survey will be released on Thursday.
Silver for March delivery rose 6.8 cents, or 0.38 percent, to close at 17.889 dollars per ounce. Platinum for April delivery added 1.9 dollars, or 0.19 percent, to close at 1,002.20 dollars per ounce.