Gold dipped on Tuesday to trade near a three-week low hit in the previous session, pressured by expectations that the US Federal Reserve will raise interest rates sooner rather than later.

The prospect of an early rate hike, as indicated by Fed meeting minutes released last week, and a strengthening dollar have pushed down bullion by 3.6 percent so far in May, on track for its biggest monthly decline since November.

Gold is sensitive to rising interest rates, which increase the opportunity cost of holding non-yielding bullion.

Spot gold had fallen 0.3 percent to $1,244.91 per ounce by 11:32 am Beijing time. On Monday, the metal dropped to $1,242.63 an ounce, its lowest since April 28.

US gold futures eased 0.5 percent to $1,245.60 per ounce.

"Over the next two weeks ... if the economy is on the firm side in the US and the Fed is ready to move, maybe July at the earliest, then I would say gold is ready to see a correction," said analyst Dominic Schneider of UBS Wealth Management in Hong Kong. "I definitely think gold can fall back below $1,200 in the coming one or two months."

Senior Fed officials on Monday said that rates being kept too low for too long could cause financial instability and that the US central bank would continue with rate increases next year.

Reuters