Gold eases from over two-month peak, inflation reports in focus

Gold ticked lower on Tuesday after hitting its highest level in more than two months, while investors focused on upcoming inflation data for clues on the U.S. interest-rate outlook. Spot gold was down 0.3% to $4,374.82 per ounce by 0548 GMT, after hitting its highest level since June 5 earlier in the session at $4,434.84. U.S. gold futures rose 0.4% to $4,435.00. Gold's move higher in early session trading beyond $4,400 appears to be driven primarily by renewed flows into the metal and a notable shift in the metal market sentiment, said Ahmad Assiri, Research Strategist at Pepperstone. "If this change in sentiment continues to attract further flows, it could remain an important factor in determining whether gold can consolidate around $4,400 and potentially extend the recovery towards higher levels." The U.S. consumer price report due on Wednesday and producer price data on Thursday are likely to shape monetary policy expectations after weak July U.S. jobs data last week led markets to scale back bets that the Federal Reserve would raise rates next month. At its July meeting, the Federal Reserve kept rates steady, with three officials dissenting in favor of a hike. Lower interest rates tend to support gold as bullion pays no interest. "If the data continue to point towards a cooling economy without a meaningful resurgence in inflation, markets could further reduce expectations for tighter policy. That would likely leave the dollar vulnerable and provide another supportive backdrop for gold," Fawad Razaqzada, a market analyst at Forex.com, said in a note. On the geopolitical front, U.S. President Donald Trump responded to Iran's conditions for a peace deal with his own demands that Iran pay compensation for people killed in wars, attacks and protests, in a rhetorical escalation likely to complicate efforts to reopen the Strait of Hormuz. Among other metals, spot silver fell 1.7% to $64.64, platinum lost 0.4% to $1,745.68 and palladium declined 0.8% to $1,372.44.