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Gold was down for a second session on Tuesday as Asian shares extended a rally on growing

expectations that Britain would opt to remain in the European Union in a referendum later this week.

Two opinion polls on Monday suggested support for Britain staying in the European Union had recovered some ground following the murder of a pro-EU lawmaker.

"We think that gold is under short-term volatility, but longer-term factors driving the gold demand are still intact," said Richard Xu, fund manager of China's top gold exchange-traded fund (ETF) HuaAn Gold.

“We think that gold could be a very good buying opportunity if it pulls back a little bit," Xu said.

Federal Reserve Chair Janet Yellen's testimony before the Senate Banking Committee starts later on Tuesday, and she may offer clues on the timing of the next U.S. interest rate hike.

Citi Research would look for gold strength in the event the U.K. votes to leave the European Union even if such an outcome in the referendum also leads to strength in the US dollar.

In other words, the bank would look for gold to break away from its tendency of moving inversely to the greenback. "Why might a Brexit vote benefit gold even if the USD rallies in knee-jerk fashion?" Citi asked rhetorically.

"A Brexit outcome could mean no U.S. Fed rate hikes this year. Recent Fed meeting minutes and Chair (Janet) Yellen's presser last Wednesday confirmed market speculation that uncertainty around the EU referendum was indeed factored into the Fed's decision for a hike pass. The potential contagion impacts of the U.K. leaving the EU might cause the Fed to pause for longer, in our view, which should be bullish for gold."

Reference: Scrapregister, Reuters