Gold prices fell on Tuesday as investors awaited the U.S. inflation data due later this week to gain more certainty on the timing of future U.S. rate cuts, while a weaker Chinese currency supported demand in Asia.

Spot gold was down 0.3% at $2,326.24 per ounce by 1247 GMT.

The non-yielding bullion is down 4.7% from a record high of $2,449.89 touched on May 20 amid a rally which happened against traditional headwinds such as a strong dollar and high interest rates.

"Gold has de-coupled from its traditional drivers just now and the prices are driven by sentiment in China amongst new players who are taking highly leveraged positions," said independent analyst Ross Norman.

"The problem for them is they have driven prices above where most others see the fair value price of gold. So it is yo-yo'ing in a trading range on relatively light volumes with modest participation from US and European investors."

In China, yuan hit its weakest since mid-November against the dollar on Tuesday, supporting demand for gold from local investors looking for a currency depreciation hedge. The yuan is set for its sixth straight monthly decline in June.

"Whether the West adjusts its perception of the fair value price of gold upwards and participates more fully, or the East lowers its expectations for prices downwards as gravity takes hold is the key question," Norman added.

In the West, traders were waiting for the U.S. first-quarter gross domestic product (GDP) estimates due on Thursday and the personal consumption expenditures (PCE) price index report on Friday.

"The upside price potential for gold is limited in the short term, as the first interest rate cut in the US is only expected to take place at the end of the year," Commerzbank said in a note.

Meanwhile, global physically-backed gold exchange-traded funds (ETFs), a crucial category of demand, saw inflows last week of $212 million, or 2.1 metric tons, according to the World Gold Council. It estimates the net outflows since the start of 2024 at $7.3 billion.

Elsewhere, spot silver fell 0.2% to $29.57 per ounce, while platinum lost 0.5% to $989.43 and palladium was down 1.0% at $969.38.

(Reporting by Polina Devitt in London; additional reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Ravi Prakash Kumar and Vijay Kishore)