Gold prices drifted lower on Tuesday, while investors awaited a slew of U.S. economic data to gauge the size of the Federal Reserve's expected interest rate cut this month.

Spot gold eased 0.2% at $2,494.19 per ounce by 0155 GMT. Prices hit a record high of $2,531.60 on Aug. 20.

U.S. gold futures fell 0.1% at $2,526.10.

The dollar lingered near a two-week high. A stronger dollar makes gold less appealing for other currency holders.

"Gold is unable to recapture levels around all-time highs due to lack of fresh positive catalysts. If we see U.S. data pointing to a weak economy and the Fed taking to the narrative of having a jumbo rate cut, gold will rally," said Kelvin Wong, OANDA's senior market analyst for Asia Pacific.

"Prices could go as high as $2,640 this year, likely to hit when the Fed confirms that it is kick starting a long-term rate cut cycle."

Lower rates reduce the opportunity cost of holding the zero-yield bullion.

Investors will be focussed on the U.S. August non-farm payrolls report due on Friday. Economists surveyed by Reuters expect the addition of 165,000 U.S. jobs.

The ISM surveys, JOLTS job openings and ADP employment report are also on investors' radar.

Traders currently see a 31% chance of a 50-basis-point rate cut at the Fed's Sept. 17-18 policy meet and a 69% chance of a quarter-point cut.

Last week, data showed U.S. consumer spending picked up in July, arguing against a 50-bp rate cut.

Gold "remains our preferred hedge against geopolitical and financial risks, with additional support from imminent Fed rate cuts and ongoing emerging market central bank buying. We therefore open a long gold trade recommendation," Goldman Sachs said in a note.

Spot silver dipped 0.2% to $28.44, platinum fell 0.8% at $922.27 and palladium lost 0.5% to $974.29.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)