Gold prices fell on Tuesday, dragged by a stronger dollar and higher U.S. Treasury yields, as investors turned their attention to next week's Federal Reserve policy meeting for more signals on its rate hike timeline.

Spot gold slipped 0.3% to $1,814.34 per ounce by 12:00 p.m. ET (1700 GMT). U.S. gold futures fell 0.2% to $1,813.50.

"If the Fed hikes rates next week, gold could see a selloff below $1,800. But, it'll be a temporary low because the market will know the Fed is in a bad position if it hikes rates before March," said Bob Haberkorn, senior market strategist at RJO Futures.

Following the first rate hike, gold prices could trade in a range of $1,780-$1,830, Haberkorn added.

Benchmark 10-year U.S. Treasury yields touched a two-year peak, while the dollar hit a six-day high earlier in the session, making gold expensive for overseas buyers.

Gold steadies as weak US data offsets firmer dollar

While gold is considered an inflationary hedge, it is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.

Limiting bullion's losses, U.S. stock indexes opened lower on Tuesday.

"We are at a path for higher yields throughout the year which will limit the upside to gold, but the inflation story keeps gold going here," Haberkorn said.

Global investor attention remains fixed on the Fed's Jan. 25-26 meeting after officials signalled they would start raising interest rates in March to curb inflation.

Spot silver was up 2% at $23.45 an ounce, platinum rose 1.4% to $985.21 and palladium rose 1.8% to $1,909.38.

"As the market continues to pencil in additional Fed rate hikes, with a full four hikes priced for 2022 and a near-certain March hike priced, precious metals appear vulnerable to a consolidation," TD Securities said in a note.