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Gold prices rose on Tuesday, as the U.S. dollar and Treasury yields fell after traders slightly pared bets for an interest rate cut by the U.S. Federal Reserve in the first quarter of 2024.

Spot gold was up 0.2% at $2,033.49 per ounce by 0451 GMT. Bullion had surged to an all-time high of $2,135.40 on Monday, before dropping over $100 in a single day to close 2% lower.

U.S. gold futures for February delivery rose 0.5% to $2,051.70.

Making gold less expensive for other currency holders, the dollar index fell 0.1%, while yields on 10-year Treasury notes slipped to 4.2587%. [USD/] [US/]

Even after the dramatic moves in gold prices over the past 24 hours, "for now, the overall trend for gold still looks bullish," said Ilya Spivak, head of global macro at Tastylive.

A wave of profit-taking seems to have triggered after gold rallied at weekly open, to catch-up to Fed Chair Jerome Powell's dovish comments from Friday, along with "pre-positioning ahead of this week’s event risk (Reserve Bank of Australia and Bank of Canada rate decisions, U.S. jobs data)," added Spivak.

However, traders have lowered their Fed rate cut bets by March next year to about 60%, from 70% on early Monday, CME's FedWatch Tool shows.

Investors are awaiting the closely-watched U.S. non-farm payrolls data on Friday, which could help further gauge the interest rate outlook.

Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

Data last week pointed out to cooling inflationary pressures, and a gradually easing labour market, reinforcing the notion of an early rate cut.

Spot gold may test support of $2,009 per ounce, a break below which could open the way towards $1,980, according to Reuters technical analyst Wang Tao. [TECH/C]

Spot silver rose 0.2% to $24.53 per ounce, palladium rose 0.1% to $977.62 per ounce, while platinum slipped 0.3% to $913.67.