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Gold consolidated gains on Tuesday, extending its climb for a third session on a weaker dollar and Treasury yields in a slow final week of the year, with traders expecting the Federal Reserve to cut U.S. interest rates in early 2024.

Spot gold rose 0.3% to $2,059.79 per ounce by 2:10 p.m. ET (1910 GMT), near a more than two-week high of $2,070.39 hit in the last session. U.S. gold futures settled mostly flat at $2,069.80.

Several markets were closed the day after Christmas for public holidays and trading is expected to remain muted the whole week.

"You may see speculators climb aboard early on the long side, thinking that the metals markets are due for some more upside action in the first quarter," said Jim Wyckoff, senior analyst at Kitco Metals.

COMEX gold speculators raised their net long position by 20,365 contracts to 131,749 in the week to Dec. 19, data showed on Friday. [CFTC/]

"The likely less restrictive monetary policies in 2024 will mean better commercial demand for precious metals," Wyckoff said, adding that resurgent inflation or more economic weakness in top bullion consumer China could dampen his bullish outlook.

Traders were pricing in an 85% chance of a Fed rate cut in March, according to the CME FedWatch tool.

The dollar index hovered near five-month lows while benchmark U.S. 10-year bond yields also fell. [US/] [USD/]

Lower interest rates increase the appeal of non-yielding bullion and weaken the U.S. currency, making dollar-priced gold more attractive for those holding other currencies.

"Spot gold should find adequate reasons to remain supported above the psychologically important $2,000 level, as long as the Fed can stay the course with its intended rate cuts next year," said Han Tan, chief market analyst at Exinity Group.

Silver inched up 0.1% to $24.19 an ounce while palladium fell 1.9% to a one-week low of $1,179.60.

Platinum climbed 0.6% to $976.75, nearing highs since Sept. 1 in its sixth consecutive session of gains.