Precious metals rebounded on Tuesday on a weaker dollar and a rally in crude oil as signs of economic recovery further induced inflation-hedge buying.

Gold futures gained $2.2 an ounce on Tuesday, closing at $954.7 on COMEX. The gain was capped on MCX due to slight appreciation in Rupee against dollar. Silver futures rose by 1.84 percent and 0.84 percent on MCX and COMEX respectively.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings were steady at 1,132.15 tonnes as of June 9, unchanged from the previous business day.

The dollar retreated after a sharp rally in the past two sessions as investors questioned whether the U. S. economy is strong enough to justify higher interest rates some expect by year end.

Gold/oil ratio stood at 13.67, lower than the 13.86 of the previous session.

Gold prices edged higher yesterday due to weakness in dollar. Since last month Gold prices are absolutely moving in line with crude oil prices and also moving inversely with dollar movement. Weaker dollar and firm crude oil prices may result in some upside in Gold. Strong base metals complex is driving up investment demand for Silver so Silver prices are likely to edge higher.