By Ashitha Shivaprasad
(Reuters) - Gold edged lower on Tuesday as the dollar held close to a near three-week high, while investors awaited direction on interest rate hikes from minutes of the U.S. Federal Reserve's last meeting.
Spot gold fell 0.2% to $1,774.79 per ounce by 1730 GMT, after a more than 1% decline on Monday.
U.S. gold futures settled down 0.5% at $1,789.7.
The dollar held near a three-week high hit earlier in the session.
"Gold is facing some exhaustion as the dollar continues to appreciate ahead of Fed minutes... Gold market will be very choppy until we get to the Fed meeting in September," said Edward Moya, senior analyst with OANDA.
The minutes from last month's Fed meeting will be published at 14:00 ET on Wednesday.
"The minutes will likely confirm the belief that aggressive rate hikes are still on the table, which could support dollar and potentially put downward pressure on gold," Moya added.
Recently, several Fed officials highlighted the need to continue raising interest rates to fight persistent inflation. Gold is considered an inflation hedge but higher rates make the non-yielding asset less attractive.
Investors have pulled out of gold exchange-traded funds and that could be weighing on gold too, Bank of China International analyst Xiao Fu said. [GOL/ETF]
However, "as the risk of recession rises, gold's downside could be limited despite aggressive rate hikes," Standard Chartered said in a note.
Spot silver fell 0.8% to $20.10 per ounce, platinum edged 0.1% higher to $933.72, while palladium rose 0.2% to $2,150.51.
Rising recession risks are more likely to weigh on platinum, the industrially biased precious metal, which in particular could remain at the lower range traded so far this year despite supply concerns in South Africa, Standard Chartered added.
(Reporting by Ashitha Shivaprasad, Arundhati Sarkar and Rahul Paswan in Bengaluru; Editing by Devika Syamnath and Shailesh Kuber)