Robust economic growth expectations, lower real policy interest rate and relatively limited spread between US high bond yields and treasury temper any concern on inverted yield curve
Spot gold was down 0.2 percent at $1,324.01 per ounce, as of 0800 GMT, after hitting $1,321.16 earlier in the session, its lowest since March 21.
Highly positive market sentiment largely dominated the forex trading from the beginning on the back of cooling of trade tensions between the US and China with global markets stabilising.
Panic dollar buying by corporates and importers along with worries over fund outflows from domestic capital market predominantly kept trading mood at extreme level despite a strong start.
Spot gold was down 0.1 percent at $1,339.60 per ounce, as of 0712 GMT. It climbed 1.3 percent on Monday in its biggest one-day percentage gain in a week.
A spectacular relief rally in local equities further supported the forex sentiment amid extreme bearish dollar overseas cues.
Fear and panic gripped the currency market sentiment initially after US President Donald Trump decided to slap tariffs on China.
A bigger risk for now is the looming trade war following the US' decision to hike import tariffs on steel and aluminum.
The rupee opened at 65.12 a dollar and touched a high of 65.0250 in day trade after a less hawkish Fed commentary on rate hike in 2018.
Higher interest rates stateside could trigger capital outflows from emerging economies as investors search for better yields in the U.S.
The Fed raised interest rates on Wednesday and forecast at least two more hikes in 2018, contrary to three more increases most market watchers expected.
The funds rate is closely tied to consumer interest rates, which generally rise as soon as the Fed moves.
The greenback's weakness against other currencies overseas helped the domestic unit, market watchers said.
Spot gold was 0.4 percent higher at $1,315.84 per ounce at 0746 GMT. Prices fell to a nearly three-week low of $1,306.91 in the previous session.
The U.S. central bank projected late last year that it would lift rates three times in 2018, but some investors believe the fiscal stimulus and recent hints of inflation pressures will push policymakers to add an additional increase to the mix.
The looming Fed meeting has helped push gold down nearly 4 percent from a 1-1/2-year high in January.
The sentiment in forex market turned weak after the country's current account deficit widened in the December quarter on the back of higher trade deficit.
Spot gold was unchanged at $1,315.80 per ounce at 0100 GMT.
The rupee opened lower at 64.83 per dollar as against yesterday's close of 64.79 at the inter-bank foreign exchange here. The domestic unit hovered between a high of 64.76 and low of 64.94 during morning deals. It was trading at 64.90 at 1030 hrs.
The rupee opened lower at 65.06 as against yesterday's close of 64.76 at the inter-bank foreign exchange here.
Spot gold had slipped by 0.1 percent to $1,328.65 an ounce at 0130 GMT and was down for a fourth straight session. Prices fell 1.3 percent on Tuesday, in their biggest one-day percentage decline since Dec. 7, 2017.
Spot gold was down 0.4 percent at $1,341.20 an ounce at 0340 GMT. Earlier, it fell to as low as $1,340.16, the lowest since Feb. 14.
Spot gold was mostly unchanged at $1,317.51 an ounce, at 0321 GMT. Prices touched their lowest since Jan. 4 at $1,306.81 on Thursday.
Brent futures were down 38 cents or 0.6 percent, at $64.43 a barrel by 0146 GMT. On Thursday, Brent fell 1.1 percent to its lowest close since Dec. 20.
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