KONTAN.CO.ID - SINGAPORE. Gold prices fell on Tuesday after a five-session rally, as the dollar firmed and investors awaited key central bank meetings for clues about rate hikes amid rising inflation concerns.

Spot gold declined 0.4% to $1,800.80 per ounce by 0816 GMT. U.S. gold futures were down 0.2% to $1,802.50.

"There is a slight recovery in the dollar and this is not the best factor for gold. However, prices are not expected to fall sharply as investors have realized that risks are still just behind the corner," said Carlo Alberto De Casa, external analyst at Kinesis Money.

The dollar recovered from a recent pullback, making bullion more expensive for holders of other currencies.

The Bank of Japan and the European Central Bank are both set to hold monetary policy meetings on Thursday, while the U.S. Federal Reserve's policy meeting is next week.

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Gold, therefore, has not much room in the short term, said De Casa, adding: "Only a dovish Fed or a slowdown of USD could lift up gold to $1,900, otherwise it only has space for a moderate appreciation to $1,820-1,830."

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, increasing non-interest bearing bullion's opportunity cost.

Stephen Innes, managing partner at SPI Asset Management, said, "if inflation runs rampantly out of control, the Fed could raise rates quicker than priced in, and that should cool sentiment in the gold market."

Fed Chairman Jerome Powell recently said the U.S. central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but should not yet touch the interest rate dial.

Spot silver fell 1% to $24.30 per ounce. Platinum shed 0.7% to $1,050.02, and palladium was little changed at $2,050.55. 

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Editor: Herlina Kartika Dewi