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Gold prices inched lower on Tuesday, weighed by an uptick in the dollar, although hopes of slower interest rate hikes by the Federal Reserve capped further losses.

Spot gold was down 0.4% at $1,910.48 per ounce, as of 0304 GMT. On Monday, prices hit $1,929, the highest since late-April 2022.

U.S. gold futures fell 0.5% to $1,912.70.

The dollar gained 0.3%. A stronger dollar turns gold less attractive to buyers with other currencies.

"Expectations of the Fed slowing pace of rate hikes has been supporting gold. Currently, we are seeing a technical pull back as prices entered the overbought territory. Also, the dollar is firming slightly," said Ajay Kedia, director at Kedia Commodities, Mumbai.

Markets are mostly pricing in a smaller 25-basis-points (bps) increase when the Fed announces its policy decision in February. The U.S. central bank slowed its pace of rate hikes to 50 bps in December after four consecutive 75 bps increases. [FEDWATCH]

Since bullion is a zero-yielding asset, lower rates tend to be beneficial for gold as they reduce the opportunity cost of holding the asset.

According to industry analysts, gold prices are expected to hit record highs above $2,000 an ounce this year, albeit with a little turbulence, as the Fed slows the pace of hikes and eventually stops increasing them.

Investors kept a tab on rising COVID-related deaths in top gold consumer China. Meanwhile, China's economic growth in 2022 slumped to one of its worst in nearly half a century as the fourth quarter was hit hard by stringent COVID curbs and a property market slump.

Spot silver inched 0.8% lower to $24.20.

"We expect silver to outperform gold in 2023 as there is good industrial and investment demand amid low inventories," Kedia Commodities' Kedia said.

Platinum was flat at $1,062.50, while palladium rose 0.2% to $1,754.37.