Gold prices slipped on Wednesday as the dollar ticked up, while investors awaited a key U.S. inflation report due this week for more clarity on the size of a likely September rate cut.
Spot gold fell 0.6% to $2,509.75 per ounce by 0749 GMT. Bullion hit a record high of $2,531.60 on Aug. 20.
U.S. gold futures were down 0.4% to $2,543.20.
The dollar index was up 0.2%, diminishing gold's attractiveness for foreign currency holders. [USD/]
"Gold is still overall bullish, and that's a story linked to the fact that next month we are expecting the start of the Fed rate cut cycle," said Ilya Spivak, head of global macro, Tastylive.
Markets are pricing in about a 66% chance of a 25 basis points U.S. rate cut in September and a 34% chance of a 50 bps cut, according to the CME FedWatch tool.
Non-yielding bullion tends to thrive in a low-interest-rate environment.
Last week, Federal Reserve Chair Jerome Powell last week endorsed an imminent start to rate cuts and expressed confidence that inflation is within reach of the U.S. central bank's 2% target.
"The market seems to be waiting for a catalyst to ignite the potential bullish breakthrough above that $2,532 level," said Kelvin Wong, OANDA's senior market analyst for Asia Pacific.
Market participants are now focused on the U.S. personal consumption expenditure (PCE) data, the Fed's preferred measure of inflation, due on Friday.
A report on Tuesday showed that U.S. consumer confidence rose to a six-month high in August but Americans are becoming more anxious about the labour market.
China's net gold imports via Hong Kong in July rose by about 17% from the previous month, the first gain since March, data showed on Tuesday.
Among other metals, spot silver slipped 1.7% to $29.48 per ounce, platinum was down 1% at $943.70 and palladium fell nearly 1% to $960.25.
