Gold edges lower, market focus turns to OPEC

Gold slipped on Tuesday as the dollar steadied, with markets on edge ahead of a meeting this week that could see oil producers curb output.

Spot gold was down 0.2 percent at $1,191 an ounce by 0559 GMT. It gained 0.9 percent in the previous session.

U.S. gold futures were slightly down at $1,190.10 per ounce.

"People will be likely watching the OPEC (Organization of the Petroleum Exporting Countries) meeting. If the meeting leads to higher oil prices, that should have some inflationary pressure across the global economies, especially the U.S. and that could lead to lower gold prices," said Barnabas Gan, an analyst at OCBC Bank in Singapore.

Since gold and crude oil are dollar-denominated commodities, they are strongly linked.

"Gold could see a better tone this week assuming that the dollar takes a bit of a breather from its upward advance and if U.S. equity markets pause after several weeks of heady gains," INTL FCStone analyst Edward Meir said in a note.

"The wild card remains oil. A failure by the OPEC to agree on a credible production cut could send prices (oil) sharply lower and drag down gold with it."

"Conversely, we could see the dollar weakening as a result of oil selling off, so at this stage it is not necessarily clear what direction gold will take," he said.

Oil prices fell early on Tuesday on doubts over a meaningful output cut during Wednesday's meeting.

The dollar index, which measures the greenback against a basket of currencies, was steady at 101.260.

Global growth will pick up faster than expected in the coming months as the U.S. President-elect Donald Trump administration's planned tax cuts and public spending fire up the U.S. economy, the Organisation for Economic Cooperation and Development said on Monday.

Also weighing on bullion was a highly anticipated U.S. interest rate hike in December by the Federal Reserve, which is due to next meet on Dec. 13-14.

"The probability of a rate hike is 100 percent. Market watchers are looking for a hike and that's why prices are so weak - under $1,200," OCBC analyst Gan said.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

Speculators cut their net long positions in COMEX gold and silver contracts in the week to Nov. 22.

Silver fell 0.4 percent to $16.57 an ounce.

Palladium dropped 0.2 percent to $754 and platinum slipped 0.3 percent to $922.45.