Gold prices eased on Tuesday, as a slightly firmer dollar and optimism over a potential ceasefire between Russia and Ukraine dampened demand for safe-haven assets.

Spot gold was down 0.5% at $3,214.17 an ounce as of 0627 GMT. U.S. gold futures slipped 0.6% to $3,215.60.

The dollar slightly recovered after touching a more-than-one-week low in the prior session, making greenback-priced gold less appealing to holders of other currencies.

"We are seeing a knee-jerk response to the U.S. credit downgrade wear off and there's some hope of a truce between Ukraine and Russia," said Kyle Rodda, Capital.com's financial market analyst.

U.S. President Donald Trump said on Monday that Russia and Ukraine will immediately start negotiations toward a ceasefire.

"We are seeing buyers emerge on dips below $3,200. However, I think we are due a bigger pullback, especially if there's further easing in geopolitical risks and we see upward pressure on yields building from U.S. fiscal policy."

Gold, considered a safe asset amid geopolitical and economic uncertainties, has hit multiple record highs this year en route to its 22% surge so far this year.

Moody's cut the United States' rating to "Aa1" from "Aaa" on Friday, citing rising debt and interest "that are significantly higher than similarly rated sovereigns".

U.S. Federal Reserve officials cautiously took on the ramifications of the downgrade as well as the unsettled market conditions as they continued to navigate a very uncertain economic environment.

Several Fed officials are scheduled to speak later in the day, potentially providing further insights into the economy and the central bank's policy path.

Markets are now pricing in at least 54 basis points of rate cuts this year, with the first in October.

Spot silver fell 0.4% to $32.23 an ounce, platinum was up 0.8% at $1,005.45, and palladium was steady at $974.70.

Source: Reuters