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Gold prices steadied on Tuesday after sharp early losses as a rally in the dollar paused, but gains were capped by expectations of steep rate hikes from the Federal Reserve.

Spot gold rose 0.1% to $1,820.70 per ounce by 1121 GMT, after earlier touching its lowest since May 19 at $1,810.90.

U.S. gold futures slipped 0.6% to $1,821.70.

The dollar index was little changed after a run to a near two-decade high on Monday, which sent greenback-priced bullion nearly 3% lower. U.S. benchmark 10-year yields also eased off a multi-year high. [USD/] [US/]

Gold has been offered some room to breathe as the dollar retreats and yields slip, said FXTM analyst Lukman Otunuga.

"But sentiment towards gold remains bearish as investors price in the chance for a 75-basis point U.S. rate hike following last Friday's smoking-hot inflation figures. Even if the precious metal pushes higher, this could be based on short-term factors and technicals," Otunuga added.

With the Fed's two-day policy meeting starting later on Tuesday, markets were largely pricing in a 75-basis-point interest rate hike. [FEDWATCH]

"If it's 75, gold could continue heading lower, probably falling below $1,800 this time. If it's only a 50 basis point hike, gold may be able to hold its own around $1,800-$1,830," said City Index analyst Fawad Razaqzada.

Gold is not likely to move higher since the Fed will be "quite hawkish in the face of rising price pressures" globally, Razaqzada added.

While inflation and economic uncertainties are usually supportive of safe-haven gold, higher rates increase the opportunity cost of holding non-yielding bullion.

Silver rose 0.3% to $21.12 per ounce, platinum edged 0.1% lower at $932.54. Palladium rose 0.4% to $1,803.42, having earlier hit a near six-month trough at $1,781.21.

"Palladium (and platinum) are hit by the lack of demand from the automotive industry," Commerzbank said in a note.