LONDON, March 26 (Reuters) - Gold prices rose on Tuesday supported by a weaker dollar as investor focus turns to U.S. inflation data due later this week, which could shed more light on the timing of the Federal Reserve's first interest rate cut this year.
Spot gold rose 1.1% to $2,196.21 per ounce by 1122 GMT.
Gold hit a record high of $2,222.39 last week after Fed policymakers indicated they still expected to reduce interest rates by three-quarters of a percentage point by 2024-end despite recent high inflation readings.
"Unless there is significant news that indicates a speeding up of rate cuts, gold is unlikely to hit a new record high before Easter," said Nitesh Shah, commodity strategist at WisdomTree.
"However, we expect new records to be broken by the end of the year," he said. According to WisdomTree, gold prices may top $2,350 in the first quarter of 2025.
Traders are pricing in a 70% probability that the Fed will begin cutting rates in June, according to the CME Group's FedWatch Tool.
The dollar index , meanwhile, slipped 0.1% against its rivals, making gold less expensive for other currency holders. Focus is now on U.S. core personal consumption expenditure price index data due on Friday.
Gold prices are also supported by elevated physical demand from Chinese households amid some scepticism about the prospects for the country's real estate and stock market. This helped offset softening demand from price-sensitive Indian buyers.
Purchases by central banks, which are less price sensitive than retail consumers, also remain strong, providing further support to the metal. China's central bank has been the most active buyer since late 2022.
"The motivating factor for their gold purchases is diversification away from the G7 currencies, after these currencies were weaponised in 2022 following the (Russia-)Ukraine war," Shah said.
Spot silver rose 0.2% to $24.73, platinum fell 0.2% to $900.99, while palladium lost 0.4% to $1,000.75.
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Reporting by Polina Devitt in London; additional reporting by Brijesh Patel in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber
