The precious metal hit a low of $1269.98 an ounce, while currently trading around $1274.57 from the opening at $1278.73.
The dollar index, which tracks the green currency’s movements versus a basket of six major currencies, retreated after rising to a three-week high of 94.97.
The green currency is currently trading around 94.67, compared to the opening at 94.78, ahead of the release of Fed minutes for April’s meeting later in the day.
Data released on Tuesday showed that U.S. consumer prices rose at the fastest pace in more than three years in April.
Another reports signaled progress housing starts and industrial production in April, adding more positive outlook about the U.S. economy.
The sanguine data raised expectations the Fed may hike its interest rates next month, with odds soaring to 12 percent from 4 percent at the beginning of the week.
“I think that the data to my mind are lining up to make a good case for rate increases in the next few meetings, not just June, which means it’s very live in terms of that,” San Francisco Fed President John Williams said on Tuesday.
Atlanta Fed President Dennis Lockhart mentioned that a June rate hike “wouldn’t take it off the table.”
Recent comments from Fed officials suggested there could be from two to three interest rate increases this year.
Gold is very sensitive to interest rate movements, especially by the Fed, since the yellow metal provides no interest to its holders and thereby benefits from the low interest rate environment.
Later in the day, eyes will focus on minutes of the Federal Open Market Committee’s April 26-27 meeting.
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