Gold prices recovered from a three-week low hit the previous session, as a weaker dollar provided support on Tuesday ahead of US inflation data and major central bank policy meetings expected to yield clues on interest rates. Spot gold was up 0.4 per cent at $1,988.69 per ounce. US gold futures rose 0.5 per cent to $2,004.10, according to news agency Reuters.

The dollar edged 0.3 per cent lower against its rivals, making gold less expensive for other currency holders. Analysts say that the chances of gold rising in the near term once again above the $2,000 level depend on what happens today with the inflation data.

US Federal Reserve December Meet: See date, timing, and schedule details here

An upbeat US jobs report last week dampened expectations the Federal Reserve could cut interest rates as soon as March. The US consumer Price Index (CPI) report. Economists polled by Reuters expect US headline inflation to be flat for November and core inflation to be steady at an annual pace of 4 per cent - well above the Fed's 2 per cent target.

The Federal Open Market Committee's two-day monetary policy meeting will end on Wednesday with its interest rate decision and the release of its summary economic projections. The Fed is widely expected to leave rates unchanged at 5.25 per cent-5.50 per cent this week, with about 77 per cent chance of a rate cut in May, according to the CME FedWatch Tool. 

Lower interest rates tend to support non-interest-bearing bullion. Gold's trajectory could also be influenced by policy meetings of the European Central Bank and the Bank of England on Thursday.

Silver rose 0.7 per cent to $22.94 per ounce, while platinum gained 1.4 per cent to $922.34, and palladium climbed 2 per cent to $976.38 per ounce, according to Reuters.

In the last FOMC meeting, the US Fed decided to keep the key overnight interest rates unchanged at 5.25-5.50 per cent. The central bank held interest rates steady at a 22-year high for the second time in a row, even as the US economy remains resilient despite high interest rates while inflation still remains above the Fed's 2 per cent target level.