March 14 (Reuters) - Gold edged lower on Thursday as the dollar and Treasury yields held firm ahead of a slew of U.S. economic data due later in the day, which could offer more clarity on the timing of the Federal Reserve's first interest rate cut this year.
Spot gold fell 0.3% to $2,166.80 per ounce as of 1147 GMT. Bullion had hit a record peak of $2,194.99 on March 8. U.S. gold futures also dipped 0.4% to $2,172.30.
The dollar held steady against its rivals, making gold less attractive for other currency holders, while benchmark U.S. 10-year notes yields rose to a more than one-week high.
"Market participants still believe that a mid-year U.S. rate cut is possible, keeping gold supported. Guess the next driver is the upcoming FOMC meeting and any change in the dot plots," said UBS analyst Giovanni Staunovo.
The Fed is expected to hold rates steady at its policy meeting next week, but the focus will be on the "dot plot" projections. The U.S. central bank in its December meeting pencilled three-quarter-point rate cuts for 2024.
"In the near term, gold prices are likely to stay volatile, but we retain a modestly positive outlook, targeting $2,250/oz by the end of the year, supported by rate cuts starting mid-year and higher investment demand," Staunovo added.
Traders continue to bet on interest rate cuts in June, pricing in about 66% chance compared to 72% before the CPI data, according to the CME Group's FedWatch Tool, opens new tab.
Low interest rates help gold as they reduce the opportunity cost of holding the non-yielding bullion.
Investor focus is on the U.S. producer price index, retail sales and weekly jobless claims data, which are due at 1230 GMT.
Spot platinum fell 0.1% to $937.45 per ounce, palladium rose 1.1% to $1,070.99.
Silver slipped 0.2% to $25.00, after hitting a more than three-month high earlier in the session.
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Reporting by Sherin Elizabeth Varghese and Brijesh Patel in Bengaluru; Additional reporting by Daksh Grover; Editing by Shilpi Majumdar
