Gold retreats as markets await key US inflation data

Gold eased from a more than one-week high on Monday as investors stayed cautious ahead of key US inflation data due this week for fresh clues on the Federal Reserve's interest rate path. Spot gold fell 0.2% to $4,185.13 per ounce by 0714 GMT, after hitting its highest since October 2 earlier in the day. US gold futures for December delivery dropped 0.2% to $4,209.70. "In the short term, a cooler-than-expected US inflation reading would be the clearest near-term catalyst, as it would reduce the odds of further Fed tightening and ease pressure on real yield," said Tim Waterer, chief market analyst at KCM Trade. "Longer term, sustained central bank buying and any further de-escalation in geopolitical flashpoints that brings oil and the dollar lower would improve the backdrop for gold." US President Donald Trump made a surprise announcement of an energy ceasefire between Russia and Ukraine on Sunday that he said was "effective immediately", but Ukrainian President Volodymyr Zelenskiy said he was still waiting to see details of the deal. Oil prices fell on expectations of more Russian supplies. The US dollar held its ground near its strongest level in a year and a half reached last week, making greenback-priced bullion more expensive for buyers holding other currencies. While gold is typically seen as a hedge against inflation, higher interest rates tend to diminish the non-yielding metal's appeal. Markets are now awaiting the US Consumer Price Index (CPI) report on Wednesday, followed by the Producer Price Index (PPI) and retail sales data on Thursday. Traders see a 19% chance of a rate hike in October and an 84% probability of an increase by December, according to CME’s FedWatch tool. Meanwhile, US consumer sentiment slumped further in early October as the rising cost of living because of the Middle East conflict soured households' views of the economy. Among other metals, spot silver rose 0.2% to $60.95 per ounce, platinum gained 0.8% to $1,701.18 and palladium climbed 1% to $1,159.62.