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Gold hit record high of $2,431.29 per ounce on Friday

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Silver, palladium down over 1%

(Rewrites as of 1326 GMT)

By Ashitha Shivaprasad

April 16 (Reuters) - Gold prices eased on Tuesday, as

rising expectations of fewer U.S. rate cuts this year

overshadowed safe-haven demand amid ongoing tensions in the

Middle East.

Spot gold fell 0.2% to $2,376.90 per ounce by 09:26

ET (1326 GMT). The yellow metal touched an all-time high of

$2,431.29 on Friday in anticipation of Iran's retaliatory attack

against Israel.

Data on Monday showed U.S. retail sales increased more than

expected in March. The 10-year Treasury yields were

up for the second consecutive day, making non-yielding bullion

less attractive.

"The market is in pause mode and waiting for the other

shoe to drop on this Israeli-Iran confrontation. You will see

another rally in gold if the situation escalates," said Jim

Wyckoff, senior analyst at Kitco Metals.

"If the Middle East conflict de-escalates, market focus will

turn to the Fed. It has become apparent that Fed is not going to

be able to cut rates soon, which is a bearish element for gold

and silver markets."

Federal Reserve Chair Jerome Powell told a U.S. Senate panel

just over five weeks ago the Fed was "not far" from gaining

confidence in inflation falling to the level needed to cut

interest rates but policymakers, investors and outside analysts

have lost a bit of faith in that outlook in light of a series of

strong economic data.

On gold, "we lift our 3 and 12 month price targets to $2,200

and $2,000 per ounce. We recommend not to position for lower

prices now, even though we remain convinced that in the medium

to longer term, there should be more downside than upside,"

wrote Julius Baer analyst Carsten Menke in a note.

The Shanghai Futures Exchange said it will raise the trading

bands for gold and silver contracts to 8% from 6% and 7%,

respectively.

Spot silver fell 1.4% to $28.48 per ounce, platinum

gained 0.3% to $971.85 and palladium was down 1.3%

to $1,021.75.