International gold inched higher on Tuesday after nearly dropping 2- per cent in previous trade. In the last trade gold dropped to three-week low. International spot gold was seen trading at $1,180 an ounce.
Rise in gold prices was also supported by strength in oil prices, however holding to gains could be difficult to hold due to expectations of higher interest rates in US and a stronger dollar could weigh further.
A weak dollar pushes gold higher as an alternative asset, supporting the bullion sentiment.
In India, gold futures tracking overseas trend rose on the Multi Commodity Exchange. Gold futures for February 2015 contract is trading at Rs 26,665 per 10 gram, higher by 0.21 per cent at 3.40 pm IST.
Investors and speculators are closely watching movement in equities, dollar and oil prices for further direction.