Gold retreats as dollar gains upper hand

Jan 17 (Reuters) - Gold prices fell on Tuesday as the dollar ticked up, while investors still sought direction from the U.S. Federal Reserve's rate hike path.

Spot gold fell 0.6% to $1,906.49 per ounce by 1117 GMT. The metal closed lower on Monday, after having risen to its highest since April 2022.

U.S. gold futures dropped 0.6% to $1,909.30.

The dollar index gained 0.2%, making gold more expensive for overseas buyers, while benchmark 10-year yields also rose.

"Technical factors are also weighing on the precious metal, with prices attempting to pull away from overbought levels to clear some of the froth after gold's stellar start to the new year," said Han Tan, chief market analyst at Exinity.

Analysts, however, predicted gold could hit record highs above $2,000 this year as the Fed slows hikes and eventually stops them.

Markets are expecting a smaller 25-basis-point increase after data showed headline consumer prices fell in December for the first time in 2-1/2 years. FEDWATCH

With lower rates translating into lesser returns on interest-bearing assets such as government bonds, investors may prefer zero-yield gold.

Gold is trading softer ahead of Wednesday's Bank of Japan meeting which may trigger an outsized reaction in the dollar, Saxo Bank analyst Ole Hansen said in a note.

"Given the length gold has travelled in recent weeks, a correction all the way back down to $1,852 would not alter the overall bullish technical picture."

Traders also kept an eye on top bullion consumer China, with data showing its economic growth slumped in 2022.

But, top finance officials at the World Economic Forum said China's reopening could drive global growth beyond expectations.

UBS analyst Giovanni Staunovo said while China's reopening could lift physical demand, it may not be a "powerful demand segment to support prices."

Spot silver slipped 1.9% to $23.9455 per ounce, platinum fell 0.6% to $1,055.67.

Palladium rose 0.1% to $1,751.88.