Gold prices were flat on Tuesday, as cautious investors awaited U.S. inflation data to gauge the size of the Federal Reserve's future interest rate hikes.

Spot gold was little changed at $1,724.19 per ounce by 0729 GMT.

Prices had hit a two-week high of $1,734.99 on Monday as the dollar fell.

U.S. gold futures were down 0.3% at $1,734.90.

"There are expectations for inflation to become a lot softer and that could help gold actually run a little bit further as expectations could then be for less aggressive Fed hikes after the September meeting," said Matt Simpson, senior market analyst at City Index.

"For us to be confident that bulls have regained control, we probably need to see gold break above $1,740."

U.S. consumer price data, due at 1230 GMT, is expected to show headline inflation rose 8.1% year-over-year in August versus 8.5% in July.

The reading puts focus on the Fed's Sept. 20-21 policy meeting, where the U.S. central bank is widely expected to deliver another 75-basis-point interest rate hike.

"An upside surprise in U.S. inflation could see gold tanking like a house of cards as aggressive rate hike expectations beyond September mount," Lukman Otunuga, senior research analyst at FXTM said in a note, adding, there is strong support around $1,700.

Even though gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding the bullion while boosts the dollar, in which the precious metal is priced.

For the day, the dollar index was down 0.2% hovering near its lowest level since Aug. 26, touched in the previous session.

Spot silver fell 0.5% to $19.69 per ounce, having recorded its biggest one-day percentage gain since February 2021 on Monday.

Platinum dipped 0.2% to $905.15 and palladium shed 2.7% to $2,203.77, falling as much as 4.7% earlier.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich and Uttaresh.V)