Gold inched up on Tuesday as traders waited for more economic data to gauge its likely influence on U.S. interest rates, while a slightly higher dollar kept prices in check.

Spot gold rose 0.2% to $1,870.16 per ounce by 1209 GMT, after hitting its lowest level since Jan. 6 on Monday.

U.S. gold futures were steady at $1,878.80.

Gold prices are likely to remain volatile until the release of the January U.S. consumer price index (CPI) next week, said UBS analyst Giovanni Staunovo.

The Federal Reserve most recently raised interest rates by a quarter of a percentage point after a year of larger hikes.

But traders have upped their forecasts of how high the Fed would need to raise rates after policymakers pushed back against an expectation that they would soon pause.

A further move higher in gold would require weaker U.S. data or a faster drop in inflation, which would ease fears of monetary tightening by the Fed, Staunovo added.

The dollar inched up 0.1%, making gold less attractive to holders of foreign currencies.

Fed Chair Jerome Powell will address an event hosted by the Economic Club of Washington later on Tuesday.

Lingering economic slowdown worries have also propped up demand for safe-haven gold, analysts said.

"Gold is likely to be lent additional tailwind in the second half of the year by the prospect of an upcoming Fed rate cut, which we continue to expect in the fourth quarter," analysts at Commerzbank said, forecasting prices at $1,850 by mid-year and $1,950 by end-2023.

On the physical front, the value of top bullion consumer China's gold reserves rose to $125.28 billion at end-January from $117.24 billion at end-December.

Elsewhere, spot silver fell 0.2% to $22.23 per ounce, platinum was down 0.4% at $968.18 while palladium fell 0.9% to $1,584.81.

(Reporting by Arundhati Sarkar in Bengaluru, additional reporting Seher Dareen; editing by Jason Neely, Kirsten Donovan)