Gold prices edged higher on Tuesday as investors remained optimistic that the U.S. Federal Reserve could drop clues about lowering interest rates in September at the end of the policy meeting this week.

Spot gold was up 0.4% at $2,392.75 per ounce as of 1355 GMT. U.S. gold futures rose 0.5% to $2,389.70.

"Europe is showing some more cracks within its economy and they are set to cut rates in September and U.S. is expected to cut rates as well, that has supported the gold market," said Phillip Streible, chief market strategist at Blue Line Futures.

At the conclusion of its two-day meeting on Wednesday the Fed is expected to maintain current interest but may signal potential policy easing as soon as September.

The U.S. rate futures market has fully priced in a rate cut in September. Lower interest rates reduce the opportunity cost of holding the non-yielding bullion.

Traders are also awaiting a series of U.S. employment data scheduled to be released this week including the pivotal non-farm payrolls report due on Friday.

U.S. job openings fell marginally in June and data for the prior month was revised higher, pointing to continued labor resilience that is underpinning the economy.

"Some short-term disappointment cannot be ruled out (in gold), but overall the direction towards higher prices in the months and quarters ahead remains," said Ole Hansen, head of commodity strategy at Saxo Bank in a note.

Meanwhile, India's gold demand in the June quarter fell 5% from a year earlier, but consumption in the second half of 2024 should improve due to a correction in local price following a steep reduction in import taxes, the World Gold Council said.

Among other metals, spot silver rose 0.3% to $27.94 per ounce, platinum gained 1.1% to $959.40 and palladium fell 1.2% at $892.88.

(Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; editing by David Evans)