* U.S. CPI data due on Thursday
* Palladium drops for an 10th straight session
Jan 8 (Reuters) - Gold prices fell to a three-week low on Monday, pressured by dollar strength and elevated Treasury yields as expectations for an imminent Federal Reserve rate cut faded, with investors looking ahead to this week's U.S. inflation data for more clarity.
Spot gold was down more than 1% at $2,023.49 per ounce by 9:41 a.m. ET (1441 GMT), after earlier touching its lowest since Dec. 18. U.S. gold futures fell 0.9% to $2,029.80.
Daniel Pavilonis, senior market strategist at RJO Futures, pointed to Friday's stronger than expected U.S. employment data.
"Maybe that takes some of the rate cut odds off the table or lowers them to some degree," he said.
The U.S. employed more people than expected in December, casting some doubt on market expectations that the Fed would start cutting interest rates in March.
Higher rates increase the opportunity cost of holding non-yielding bullion.
The dollar index was steady after posting its best week since July 2023, while benchmark U.S. 10-year Treasury yields remained above 4%.
Ahead of the U.S. consumer price inflation report due on Thursday, the market sees a 69% chance of a Fed rate cut in March, according to the CME FedWatch tool.
"If and when a recession becomes apparent, the Fed can be expected to cut rates, likely weakening the dollar and benefiting the dollar gold price," Heraeus Metals said in a note.
Spot silver was down 0.7% at $22.99 per ounce, and platinum fell 1.5% to $945.11.
Palladium lost 2.7% to $998.94, falling for a tenth session.
"In aggregate, price risk remains to the downside for palladium for 2024, and it is likely that the price will slip back below $1,000/oz at some point this year" Heraeus Metals said. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Kirsten Donovan)
