By Karen Rodrigues
Spot gold was down 0.1 percent at $1,264.34 an ounce, as of 0357 GMT, not far from a six-month low of $1,260.84 touched last week.
U.S. gold futures for August delivery were 0.2 percent lower at $1,266 per ounce.
"Rising trade tensions should have (but did not) help gold's cause all that much. Instead, it seems that the concern of rising interest rates, particularly in the U.S., continues to gnaw away at gold, as does the fact that the fund length is fleeing," INTL FCStone analyst Edward Meir said in a note.
U.S. Fed Chairman Jerome Powell last week said the central bank should continue with a gradual pace of interest rate rises amid a strong economy to balance its employment and inflation goals.
Gold, which is highly sensitive to rising U.S. interest rates, could see demand take a hit from higher rates, as these tend to boost the dollar and push bond yields up.
"The market certainly looks susceptible to some further declines until data shows any sort of weakness in the U.S. economy in particular," said ANZ analyst Daniel Hynes.
"I can't see it moving much out of the $1,266 to $1,268 range."
Meanwhile, the dollar slipped against the yen in Asian trade on Tuesday, hovering near a two-week low, as worries about an intensifying fight between the United States and its trade partners continued to slash risk appetites.
U.S. Treasury Secretary Steven Mnuchin said that forthcoming investment restrictions from the department will not be specific to China but would apply "to all countries that are trying to steal our technology."
Gold, usually seen as a safe store of value during economic and political uncertainty, has found only limited support from the ongoing global trade spat.
Gold-backed exchange-traded funds tracked by Thomson Reuters were headed for their weakest month since July 2017, as investors covered losses in equities, commodities and other markets caused by tariff disputes.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.54 percent to 820.21 tonnes on Monday.
In other precious metals, silver was nearly unchanged at $16.31 an ounce and platinum fell 0.3 percent to $862.30 an ounce.
Palladium was 0.3 percent higher at $942.13 per ounce. It touched a more than two-month low at $936 an ounce in the previous session.
(Reporting by Karen Rodrigues in Bengaluru; Editing by Amrutha Gayathri and Subhranshu Sahu)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)