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Gold edged higher on Tuesday as the dollar weakened after two top Federal Reserve officials downplayed an imminent end to monetary stimulus.
Bullion is still down more than 7% since the start of last week due to worries over an early end to the Fed's $85 billion monthly bond purchases and a cash crunch in China.
FUNDAMENTALS
* Spot gold rose 0.2 % to $1,283.55 an ounce by 0018 GMT. It fell around 1% on Monday, extending last week's 7 % slide as fears of a cash crunch in China spooked investors, and a slide in US equities prompted bullion selling to cover margin calls.
* Comex gold rose $6 to $1,283.10.
* Last Wednesday, Federal Reserve Chairman Ben Bernanke gave his most explicit signal yet that the US central bank was considering scaling back its $85 billion per month of Treasuries and mortgage-backed debt purchases.
* On Monday, Minneapolis Fed President Narayana Kocherlakota said investors were wrong to view the central bank as having become more keen to tighten policy than it was before last week's policy meeting.
* Dallas Fed President Richard Fisher said even if the bank dialled back stimulus this year, it will still be running an accommodative policy.
* Fears of a credit crunch in China's banking system eased on Monday as short-term interest rates fell. The central bank said there were sufficient funds in the market but banks needed to improve cash management and control lending.
*India's biggest jewellers' association has asked its members to stop selling gold bars and coins, about 35% of their business, adding to government efforts to cut gold imports and stem a swelling current account deficit.
* HSBC lowered its 2013 gold price forecast to $1,396 from $1,542 an ounce and its 2014 price to $1,435 from $1,600, mainly on the Fed's plans to reduce economic stimulus and weak Chinese growth prospects.
* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.43 % to 985.73 tonnes on Monday -- its lowest in over four years.
