Gold prices edged lower on Tuesday as the dollar stood firm near recent highs, although trading was subdued with traders looking for more cues on the U.S. Federal Reserve's policy path after a widely expected interest rate pause this month.

Spot gold was down 0.1% at $1,936.19 per ounce by 0740 GMT. U.S. gold futures fell 0.3% to $1,961.80 after a U.S. holiday on Monday.

"Much remains to be seen if rate cuts in 2024 follow and to what extent," said Harshal Barot, a senior consultant at Metals Focus, adding that the possibility of U.S. rates remaining higher for longer would keep gold price rallies in check.

If the U.S. economy indeed sees a soft landing, there is potential for more downside in gold as some of the aggressive rate cut expectations in 2024 second half would be pared back, Barot added.

Recent U.S. economic data has backed bets of a soft landing scenario as worries about inflation and recession have somewhat eased, cemented expectations that the Fed might not have to raise interest rates further.

Gold, which yields no interest, tends to lose its attraction when interest rates rise.

Fed officials are expected to speak during the week, ahead of the Sept. 19-20 policy meeting.

According to the CME FedWatch tool, traders see a 93% chance of the Fed leaving rates unchanged at the meeting this month and about 60% chance that the rates would remain at current levels rest of the year.

Gold prices are expected to rebound with increased conviction of 2024 rate cuts, NAB Commodities Research said in a note, adding that they see prices rising towards an average of $1,968 per ounce in the last quarter this year.

Spot silver slipped 1.6% to $23.59 per ounce, platinum dipped 1.1% to $943.28 and palladium eased 0.7% to $1,213.36.

(Reporting by Swati Verma in Bengaluru; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Rashmi Aich)