Gold rebounded slightly on Tuesday after falling to a session low but ended the day lower. The yellow metal was pressured by a higher dollar after Federal Reserve policymakers signaled a potential rate increase at the next monetary policy meeting.
Gold for April delivery was down around 0.04%, or 45 cents, to trade at $1,238.85 a troy ounce. The metal fell to a low of $1,225.5 earlier in the session.
The dollar surged to a high earlier in the day, pushing gold lower after bullish comments from central bank policymakers.
Loretta Mester, Cleveland Fed president, said she would be "comfortable" with a rate increase if inflation pressure continues to increase.
Patrick Harker, Philadelphia Fed president, echoed Mester's comments on Monday, saying that he would support an interest rate increase at March's monetary policy meeting if the economy continues to improve.
A higher dollar puts pressure on gold, causing investors to flock to the higher-yielding currency. The yellow metal has declined 40% over the last four years, but analysts are forecasting a 13% surge in gold prices for 2017. An uncertain political climate in the U.S. and Europe may push investors to invest in more gold from sellers like APMEX and Modern Coin Mart.
Gold benefited from a report from Markit later in the session that showed the U.S. Services PMI fell to 53.9 in February. Analysts were expecting an increase to 55.8.
Meanwhile, crude oil settled higher after news that compliance with cuts among OPEC members may be higher than anticipated.
OPEC Secretary General Mohammed Barkindo said OPEC members were sticking to the agreement to cut production, and he expects compliance levels to be even higher in the coming months.
At London's International Petroleum Week conference, Barkindo estimated 90% compliance among OPEC member states. The OPEC chief's comments were supported by a report from OPEC last week that showed a high level of compliance among both OPEC and non-OPEC members.
OPEC members and other major world producers agreed last year to cut output by 1.8 million barrels per day as part of an effort to reduce oversupply issues that bogged down prices for two years.
Brent gained 1.09%, ending the day at $56.70 per barrel. Crude oil futures in the U.S. increased 1.2% to trade at $54.02 per barrel.
Despite oil's rally, global oversupply continues to plague the industry. An energy report from the U.S. last week showed that crude inventories increased to record levels and the number active drilling rigs also increased.
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