By Anushree Ashish Mukherjee

(Reuters) - Gold eased on Wednesday after data showed strong U.S. business activity, even as a weakened dollar limited losses, while investors looked ahead to more economic indicators to assess when the Federal Reserve might first cut interest rates.

Spot gold was down 0.7% at $2,014.56 per ounce at 2:13 p.m. ET (1913 GMT), eyeing its worst session in a week. U.S. gold futures settled 0.5% lower at $2,016.00.

"Gold prices are pretty insulated from a hawkish repricing in rates markets, because there are signs that investors are historically under-positioned in gold despite markets expecting an imminent start to the Fed's cutting cycle," said Daniel Ghali, commodity strategist at TD Securities.

U.S. business activity picked up in January and inflation appeared to abate, an S&P Global survey showed.

A strong U.S. economy and pushback from central bank officials is leading some investors to rethink their bets on how quickly the Fed will cut rates this year.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

According to the CME's FedWatch Tool, markets expect the Fed to keep interest rates unchanged at its Jan. 30-31 policy meeting and have pushed back the timeframe of the first interest rate cut.

The dollar slipped 0.4% against its rivals, making greenback-priced bullion cheaper for overseas buyers.

"China is putting together a more comprehensive package to stem the pervasively pessimistic sentiment that has plagued their markets for months which is weighing on the broad U.S. dollar," Ghali added.

China's central bank announced a deep cut to bank reserves that will inject about $140 billion of cash into the banking system.

Investors are now focusing on the fourth-quarter advance U.S. GDP estimates on Thursday, and personal consumption expenditure data on Friday.

Spot silver rose 1.2% to $22.7 per ounce, platinum was up 0.23% to $902.18 and palladium rose 1.65% to $963.59.

(Reporting by Anushree Mukherjee and Deep Vakil in Bengaluru, Additional reporting by Daksh Grover; Editing by Mark Potter, Shweta Agarwal and Krishna Chandra Eluri)