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Gold prices fell on Tuesday with investors awaiting key U.S. inflation data and the outcome of the Federal Reserve's policy meeting for details of the central bank's plans to cut interest rates against its inflation target.

Spot gold was down 0.3% at $2,302.89 per ounce, as of 0317 GMT. U.S. gold futures fell 0.3% to $2,320.20.

"I suspect the Fed's hands are tied following the strong payrolls report, as it likely doesn't enable them to signal the September cut that traders desperately want to hear. And that could see gold take another dent or two amid rising yields and the U.S. dollar," said City Index senior analyst Matt Simpson. [USD/] [US/]

The May consumer price index (CPI) inflation report due on Wednesday will be the next major data point along with the Fed concluding their two-day meeting on the same day.

"The fact that we'll see inflation data just hours ahead of the Fed's interest rate decision means we might see a last-minute panic and elevated levels of volatility should inflation come in hot," Simpson said.

Updated economic projections from Fed officials this week are expected to show fewer interest rate cuts than policymakers anticipated three months ago amid unexpectedly sturdy inflation.

The strong U.S. jobs data and reports that China's central bank was holding off gold purchases sent bullion tumbling about 3.5% or $83 on Friday, in its biggest daily drop since November 2020.

China, the biggest official sector buyer of gold, is expected to resume its bullion shopping spree once prices ease from the record highs hit in May.

In other metals, spot silver fell 1.9% to $29.22 per ounce, platinum was down 0.6% at $962.20 and palladium lost 1.1% to $893.60.

"Fundamentals are constructive in the medium and long-term as a plethora of supply challenges and healthy demand from the auto and new-energy sectors will keep the platinum market structurally undersupplied," analysts at ANZ wrote in a note.