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Gold prices rebounded on Tuesday, helped by a pullback in the dollar and Treasury yields after data showed U.S. producer prices rose more than expected in April, suggesting inflation remained high.

Spot gold was up about 1% at $2,358.98 per ounce by 1817 GMT after dropping 1% on Monday. U.S. gold futures settled 0.7% higher at $2,359.90.

"The dollar is down and I think that's giving a bit of a lift to the gold market," said Marex analyst Edward Meir.

"The fact that Federal Reserve Chair Jerome Powell was not signaling higher rates was also a positive, and that could have given gold additional boost," Meir added.

U.S. producer prices increased more than expected in April amid strong gains in the costs of services and goods, leading traders to pare back bets of a first rate cut in September.

Gold is seen as a hedge against inflation, but higher interest rates increase the opportunity cost of holding non-yielding bullion.

The dollar fell 0.2% against its rivals after an initial jump following the U.S. data, making gold less expensive for other currency holders. Benchmark 10-year Treasury yields also crept lower. [USD/]

Meanwhile, Fed Chair Jerome Powell said he expects U.S. inflation to continue declining through 2024 as it did last year and noted it was unlikely the Fed would have to raise interest rates again.

Focus now shifts to Wednesday's U.S. consumer price figures that could provide more clarity on Fed rate cuts this year.

Elsewhere, spot silver rose 1.3% to $28.55 per ounce and palladium gained 1.8% to $978.

Platinum was up 3.6% at $1,034.90, its highest level in a about a year.

"We expect platinum to outperform on rising autocatalyst demand, greater potential for investment inflow, and capex tightening in the South Africa PGM mining industry which could disproportionately impact platinum supply," Deutsche Bank wrote in a note