Gold inched higher on Tuesday and the dollar fell after ECB President Christine Lagarde surprised market players with a blogpost stating that the central bank could increase rates in July.
Spot gold edged up 0.2 percent to $1,856.83 per ounce, while U.S. gold futures were up 0.4 percent at $1,85.44.
Risk sentiment deteriorated in financial markets, as a broad package of Chinese measures to support the economy underwhelmed investors and Snapchat parent Snap warned of deteriorating macroeconomic trends.
Snap Inc. issued a profit warning and announced plans to slow hiring and spending, reviving fears of recession and inflation hurting corporate earnings.
Investment banks UBS Group and JPMorgan Chase downgraded their forecasts for China's economic growth this year, citing disappointing April activity data and the impact of the coronavirus strategy.
As worries of runaway inflation mount, investors now await a speech by Fed Chair Jerome Powell due later in the day and the latest FOMC minutes scheduled for Wednesday for further clues with regards to growth and the future of monetary tightening in the world's largest economy.
Kansas City Fed President Esther George said she expects the U.S. central bank to raise interest rates to 2 percent by August, with further action likely to be guided by how surging inflation cools off.