Gold prices were little changed on Tuesday as investors exercised caution ahead of a key U.S. inflation reading on Wednesday that could influence the Federal Reserve's policy decision next week.

Spot gold was steady at $2,506.59 per ounce by 1031 GMT. U.S. gold futures were little changed at $2,535.20.

The U.S. consumer price index for August is expected to have risen 0.2% on a month-on-month basis, according to a Reuters poll, unchanged from the previous month.

The Fed looks set to cut interest rates at its meeting next week, with further cuts likely to boost ETF (exchange-traded fund) inflows and drive gold to $2,600/oz by year-end, UBS analyst Giovanni Staunovo said.

Markets are currently pricing in a 73% chance of a 25 basis point U.S. rate cut on Sept. 18, and a 27% chance of a 50 bps cut, the CME FedWatch tool showed.

Zero-yield bullion tends to be a preferred investment amid lower interest rates.

Gold will also enjoy tailwind from elevated geopolitical tensions as well as downside risks to the global economy, said Han Tan, chief market analyst at Exinity Group.

"Physical bullion demand could also get a seasonal lift ahead of major festivities in India and China." [GOL/AS}

Spot silver rose 0.2% to $28.39 per ounce.

Platinum gained 0.5% to $942.75 and palladium was up by 1.2% to $958.25.

A surge in sales of hybrid cars as electric vehicle take-up slows is set to provide an unexpected boost to demand for platinum group metals in the coming years.

Meanwhile, the global platinum deficit in 2024 will be twice as high as previously expected due to inflows to ETFs and purchases of large bars in China, the World Platinum Investment Council said.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Christina Fincher and Tasim Zahid)