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Gold prices rose on Tuesday as the dollar retreated, with investors bracing for U.S. inflation data that could determine the Federal Reserve's next moves in its monetary policy plans.

Spot gold was up 0.2% at $1,857.22 per ounce, as of 0305 GMT, after falling to its lowest since early-January in the previous session. U.S. gold futures rose 0.3% to $1,868.40.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding the non-yielding asset.

"If the disinflation trend in the U.S. shows signs of slowing (even if it's temporary), then caution over a hawkish Fed could undermine risk sentiment and gold while USD may find further support," said OCBC FX strategist Christopher Wong.

Investors are intently awaiting January's U.S. consumer price index (CPI) data due later in the day. Economists polled by Reuters expect the headline CPI figure gaining 0.5% month-on-month.

However, if the CPI comes in softer-than-expected then the U.S. central bank could potentially afford to slow rate hikes and "this could imply a resumption of USD softness and gold rebound," Wong said further.

Several Fed policymakers have recently signalled that more interest rate hikes were needed to bring inflation down to its 2% target.

Money markets expect the Fed's target rate to peak at 5.193% in July, from a current range of 4.5% to 4.75%.

"Bullion traders are trying to anticipate the Fed's next move, with indications (the Fed) may need to stay hawkish for longer," analysts at ANZ said in a note.

"Nevertheless, we expect a weaker USD will remain on a downward trajectory for rest of the year, putting upward pressure on the precious metal."

The dollar index slipped 0.1%, making greenback-priced gold less expensive for buyers holding other currencies. [USD/]

Spot silver was little changed at $21.96 per ounce, platinum eased 0.1% to $952.42, while palladium rose 0.3% to $1,570.94.