By Sumita Layek
Gold prices inched lower on Tuesday after hitting an eight-week high, as the U.S. dollar halted its slide ahead of Senate runoff elections in Georgia that will decide the future path of fiscal stimulus in the world's largest economy.
Spot gold was down 0.2% to $1,938.11 per ounce by 0235 GMT, after hitting its highest since Nov. 9 at $1,945.26 earlier in the session, while U.S. gold futures shed 0.3% to $1,941.40.
"The dollar has strengthened overnight from an over two-year low, that is weighing on prices," said DailyFX strategist Margaret Yang.
"Monday's rally largely priced in a Democratic win in the Senate election, so we're seeing some profit-taking as well."
Bullion jumped as much as 2.5% on Monday after the dollar slipped to its lowest since April 2018, but since then the U.S. currency has bounced back.
The dual runoff elections in Georgia will decide which party controls the U.S. Senate. A win by Democrats would make it easier for President-elect Joe Biden to push policies such as boosting stimulus.
Meanwhile, England went into a new national lockdown to contain a surge in COVID-19 cases, while New York registered its first case of the more contagious, 'UK' strain of coronavirus.
Market participants now await the minutes of the U.S. Federal Reserve's last policy meeting due on Wednesday, with expectations policy will remain accommodative as the economy attempts a rebound.
"In view of still accelerating coronavirus crisis in the U.S., the Fed will ... perhaps hint at further monetary support and extension of the extra low interest rate environment beyond 2023," Yang said.
Gold is considered a hedge against inflation and currency debasement, likely to result from large stimulus measures and lower interest rates.
Among other precious metals, silver was little changed at $27.22 an ounce, platinum lost 0.6% to $1,063.12, and palladium shed 0.5% at $2,360.68.
(Reporting by Sumita Layek in Bengaluru; Editing by Subhranshu Sahu)