(RTTNews) - Gold prices edged slightly higher on Tuesday after a sharp sell-off on Monday. February gold closed at $783.30, up $6.50 on the session.

The dollar pared early losses versus the euro as traders awaited a likely interest rate cut from the European Central Bank on Thursday. The buck also moved off its lows of the day versus the pound and rebounded away from a monthly low versus the yen. Gold usually moves opposite the dollar because of the precious metal's hedge appeal.

While there were no major economic reports released from the US on Tuesday, traders focused on comments from Philadelphia Federal Reserve President Charles Plosser, who said that deflation was not a serious threat.

Gold prices plunged more than $40 on Monday, hurt by a stronger dollar and lower oil prices. Last week, gold added $14.40 and finished the month of November up $98. The 14% rise in November was the largest one-month gain since 1999. The climb helped gold pull away from a multi-month low near $680 reached in October.

In other commodity news, oil prices fell to their lowest in three years on Tuesday. Crude touched as low as $46.82 a barrel, which is than $100 off the record $147.27 reached in July.

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