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Gold slipped on Tuesday but held near two-week highs as the metal was underpinned by cautious remarks by Federal Reserve chair Janet Yellen, who gave little indication about the timing of U.S. rate increases.

Yellen on Monday provided a largely upbeat assessment of the U.S. economic outlook and said interest rate hikes are coming but gave little sense of when.

After sliding over 6 percent in May, bullion has risen about 2.4 percent this month so far on diminishing expectations of an earlier than expected rate hike. Higher rates could dent demand for non-interest-paying gold.

"The cautiousness of investors is probably temporary and we would expect investors to take this opportunity to reload and look at further gains in the coming weeks," said Daniel Hynes, an analyst at ANZ in Sydney.

"Janet Yellen's cautious jobs comments helped reaffirm the view that the Fed may hold off from raising rates at next week's FOMC meeting," said James Steel, chief metals analyst for HSBC Securities in New York. "In the near term, there may be more room to the upside as market sentiment has shifted from favoring a near-term rate hike to a more even split between those expecting a rate rise this month and those looking for one later in the year."

Smc Comtrade said “Gold may witness some profit booking at higher levels tracking bounce back in dollar index.”

Reference: Reuters, Commodity Online