Oct 21 (Reuters) - Gold prices fell 2% on Tuesday as investors booked profits after the metal hit another record high in the previous session, driven by expectations of U.S. interest rate cuts and strong safe-haven demand.
Spot gold was down 2.1% at $4,264.91 per ounce, as of 1119 GMT, having hit an all-time high of $4,381.21 on Monday. U.S. gold futures for December delivery fell 1.9% to $4,278.50 per ounce.
The dollar index (.DXY), opens new tab rose 0.3%, making bullion more expensive for holders of other currencies.
"Gold prices are still yet to go much higher, but the speed is being a bit aggressive and as a result of that, we will get pullbacks each time we hit those fresh highs," said Nitesh Shah, commodities strategist at WisdomTree.
A combination of geopolitical and economic uncertainty, sustained central bank buying, strong investment demand and expected U.S. interest rate cuts has pushed gold 63% higher this year.
Investors' focus is now on the U.S. consumer price index (CPI) data, due on Friday. The data is expected to show a 3.1% year-over-year increase for September, reinforcing market expectations for the Federal Reserve to lower interest rates by 25 basis points at its meeting next week.
FEDWATCH
Gold, a non-yielding asset, tends to benefit from a low-rate environment.
Asian equities gained on Tuesday, buoyed by hopes of easing trade tensions between the U.S. and China, while Japan's Nikkei advanced as Sanae Takaichi prepared to become the nation's next prime minister, pressuring the yen.
"There are still many market participants that did not participate in (gold's) rally and are looking to get exposure if there is a price setback, limiting the downside for now, in my view," said UBS analyst Giovanni Staunovo.
Elsewhere, spot silver dropped nearly 4.3% to $50.19 per ounce, platinum shed 2.8% to $1,592.65 and palladium lost 4% to $1,440.73.
Increased silver flows from the U.S. and China to London's spot market have eased liquidity constraints in the world's largest over-the-counter precious metals hub, according to traders and analysts.
Reporting by Anmol Choubey and Ishaan Arora in Bengaluru; Editing by Emelia Sithole-Matarise and Shailesh Kuber
