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Gold prices firmed on Tuesday as U.S. Treasury yields eased, while investors awaited a U.S. Federal Reserve meeting which is likely to tackle concerns over rising inflation.

Spot gold rose 0.2% to $1,735.76 per ounce by 0600 GMT, while U.S. gold futures were up 0.4% to $1,735.90.

"At the moment, gold is gaining on declining yields and investors are taking the opportunity to buy gold at a still lower price, betting on long-term uncertainties like lower interest rates and higher inflation," said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.

Longer-term U.S. Treasury yields tumbled and the yield curve flattened on Monday ahead of the Fed's two-day meeting starting later in the day.

Fed policymakers, in the upcoming FOMC meeting, are set to forecast that the U.S. economy will accelerate at the quickest rate in decades in 2021 as the COVID-19 vaccine initiative ramps up and a $1.9 trillion relief package is dispersed among households.

"The Fed may address rising inflation concerns and even consider to push forward asset purchasing to compensate for the rising yields and that would be very positive for gold prices," said DailyFX strategist Margaret Yang.

Investors are also eyeing the U.S. Commerce Department's February retail sales data due on Tuesday, following January's 5.3% surge.

"The optimism around a faster recovery in economic activities has dulled the appetite for safe-haven assets," Michael McCarthy, chief market strategist at CMC Markets said, adding that unless gold breaks the $1,740 resistance level in the short-term, it won't have a substantial upside.

Gold prices slid to their lowest in nine months last week, as a stronger dollar and surging U.S. Treasury yields dented demand for the non-yielding asset.

In other metals, silver was little changed at $26.27, platinum was up 0.6% to $1,220.01 and palladium rose 0.5% to $2,399.12.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Rashmi Aich)