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Gold prices took a breather from a record-breaking rally on Monday, which was fuelled by a cooling U.S. labor market and remarks from the Federal Reserve, as traders awaited an inflation report for fresh clues on the timing of rate cuts.

Spot gold was steady at $2,178.44 per ounce, as of 0339 GMT. U.S. gold futures were flat at $2,185.30.

Gold set a record peak of $2,194.99 for the fourth straight day on Friday after data signalled a cooling U.S. labor market.

"With large speculators having increased net-long exposure at their fastest weekly pace in 3.5 years last Tuesday, gold is clearly in demand and not a market to short for any length of time whilst traders expect Fed cuts," City Index senior analyst Matt Simpson said.

COMEX gold speculators raised their net long positions by 63,018 contracts to 131,060 in the week ended March 5, data showed on Friday. [CFTC/]

Prices will simply consolidate at lofty levels heading into consumer price inflation (CPI) data for February due on Tuesday, as that is likely the single biggest driver of gold prices this week, given the Fed are now in a blackout period, Simpson said.

A cooler reading on the CPI print could help the case for an early rate cut, supporting gold prices. Fed Chair Powell sounded more confident about cutting interest rates in coming months in his Congressional testimony last week.

Traders are currently pricing in three to four quarter-point (25 bps) U.S. rate cuts, with a 75% chance for the first in June, as per LSEG's interest rate probability app.

Lower rates boost the appeal of non-yielding bullion.

Spot silver fell 0.3% to $24.25, platinum edged 0.1% lower to $911.84 per ounce, while palladium climbed 0.3% to $1,023.15.