March 12 (Reuters) - Gold prices remained under pressure on Tuesday, dropping more than 1%, after a hot U.S. inflation report dimmed prospects of the Federal Reserve cutting interest rates soon.
Spot gold fell 1.4% to $2,153.05 per ounce as of 3:08 p.m. ET (1908 GMT), retreating from a record high of $2,194.99 reached on Friday.
U.S. gold futures settled 1% lower at $2,166.1.
U.S. consumer prices increased solidly in February, suggesting some stickiness in inflation. Data showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in February. Annually, it increased 3.2%, above the 3.1% forecast.
"CPI comes in a bit sweaty but the market was expecting a high print so the initial reaction was a bit muted but prices have been volatile since," said Tai Wong, a New York-based independent metals trader.
He said gold bulls would still look for reasons to drive it higher. "Now focus will shift to next week's Fed meeting where there will be an updated dot plot," Wong said, referring to central bankers' interest rate forecasts.
The market is still pricing an around 70% chance of a U.S. rate cut by June, according to the CME FedWatch tool. The next U.S. central bank policy meeting is due on March 20.
Low interest rates help gold prices as they reduce the opportunity cost of holding the precious metal that earns no interest.
In the short run, prices will see some consolidation and probably stabilise around $2,100 level and will break above $2,200 by the end of the second quarter this year, said Aakash Doshi, head of commodities, North America at Citi Research.
Spot platinum fell 1.5% to $919.20 per ounce, palladium was steady at $1,031.04.
UBS said in a note it expects palladium to stay oversupplied over the coming years, as demand for autocatalysts keeps declining.
Silver shed 1.5% to $24.08.
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Reporting by Anjana Anil, Ashitha Shivaprasad and Sherin Elizabeth Varghese in Bengaluru Editing by Tomasz Janowski, Shilpi Majumdar and Krishna Chandra Eluri
