Gold edged lower on Tuesday as the dollar strengthened, with expectations that prices in the near-term could retest bullion's resistance at the key $2,000 per-ounce level.

Spot gold was down 0.2% at $1,975.36 per ounce, as of 0623 GMT. U.S. gold futures slipped 0.4% to $1,978.40. Gold climbed to an over one-month high of $1,998.10 on Monday, buoyed by safe-haven demand, as the Ukraine crisis dragged on and inflation concerns mounted.

However, the metal later gave up most gains as the dollar and U.S. 10-year Treasury yields strengthened. "That ($2,000 per ounce) is quite a critical level, and the fact that gold effectively closed flat on the day means there appears to be a slight hesitancy to push immediately higher," said City Index's senior market analyst Matt Simpson. "Gold has the ability to overcome the U.S. dollar strength and break above $2,000 possibly over the next week or so."

The dollar firmed to its highest since April 2020 as investors braced for multiple half a percentage-point rate hikes from the Federal Reserve as it seeks to rein in soaring inflation. While bullion is considered a safe store of value during times of political and economic crises, as well as a hedge against inflation, a firmer dollar makes greenback-priced gold more expensive for other currency holders. However, yields on the benchmark 10-year U.S. Treasury note were slightly off three-year highs on Tuesday, providing some support to zero-yield gold. Now that gold has tested near the $2,000 level, this will be a bit of an eye opener towards more traditional gold buyers and more momentum type players, Stephen Innes, managing partner at SPI Asset Management, said, adding that recession worries in the U.S. were also placing gold to go higher in the medium-term. Spot silver fell 0.3% to $25.76 per ounce, platinum rose 0.4% to $1,014.10 and palladium dropped 0.4% to $2,430.10.

(Reporting by Bharat Govind Gautam in Bengaluru; Additional reporting by Swati Verma; Editing by Sherry Jacob-Phillips and Uttaresh.V)