Gold prices slipped on Wednesday as U.S. Treasury yields firmed, while investors geared up for a crucial inflation report due later this week that could provide insights into the Federal Reserve's policy path.

Spot gold fell 0.82% to $2,341.53 per ounce by 1212 GMT. On May 20, prices hit an all-time high of $2,449.89.

U.S. gold futures dropped 0.6% to $2,342.30.

The U.S. 10-year Treasury yield rose for a second straight day and the dollar index gained 0.1%, making gold less attractive.

Higher rates tend to reduce the appeal of holding non-yielding bullion.

"Gold bulls were found guilty recently of being over-exuberant about the prospects of Fed rate cuts in 2024. This shift in expectations in turn forced spot gold back into the middle of the $2,300-$2,400 range," said Han Tan, chief market analyst at Exinity Group.

According to the CME FedWatch tool, traders are pricing in a 45% chance of a rate cut in September. Traders have recently pared back expectations of U.S. rate cuts due to hawkish rhetoric from Fed officials.

The U.S. core personal consumption expenditures (PCE) data, the Fed's preferred measure for inflation, is due on Friday.

"Higher-than-expected PCE data, which raises the prospects of higher-for-longer US rates, may force spot gold to retest the psychological $2,300 number for support," Tan added.

The fall in gold came despite ongoing geopolitical tensions in the Middle East. Safe-haven gold tends to gain during political and economic uncertainty.

Spot silver fell 0.5% to $31.95 after hitting an over 11-year high last week.

"Silver's dual role as a precious and industrial metal means it has also benefited from the current environment of reasonably strong economic growth and high inflation," said Frank Watson, market analyst at Kinesis Money.

Platinum dipped 1.9% to $1,043.80, palladium fell 1.7% to $956.18.

(Reporting by Ashitha Shivaprasad in Bengaluru; additional reporting by Daksh Grover; Editing by Ana Nicolaci da Costa and Janane Venkatramam)