Gold prices edged lower on Tuesday, but hovered near a two-month peak on a softer dollar and US bond yields, as investors awaited key US inflation data to gauge the Federal Reserve's next move on rate hikes.
Spot gold fell 0.1 per cent to $1,822.86 per ounce by 0426 GMT, about $4 shy off a two-month peak scaled earlier in the session. US gold futures dropped 0.2 per cent to $1,824.80.
A subdued dollar and lower benchmark 10-year Treasury yields kept bullion's appeal intact.
A weaker dollar reduces bullion's cost for buyers holding other currencies, while lower yields decrease non-interest bearing bullion's opportunity cost.
Nicholas Frappell, a global general manager at ABC Bullion said gold faced stiff resistance at around $1,835 and the metal's trajectory over the coming sessions hinged mainly on Wednesday's US Consumer Price Index (CPI) report.
That, along with the Producer Price Index due later on Tuesday, could test the Fed's stance on rate hikes as tightness in the labour market combined with global supply chain issues could result in another high reading.
The data also comes on the heels of remarks from several Fed officials expressing growing concerns over more persistent price increases.
But Fed Vice Chair Richard Clarida and Chicago Fed President Charles Evans suggested a rate hike was not yet on the cards.
Gold has benefited from near-zero interest rates introduced during the pandemic as they reduce bullion's opportunity cost.
"I wouldn't expect anything imminent from the Fed but an above-consensus CPI could make the market's anticipation of a 2022 rate hike more likely", Frappell said, adding that such a scenario would be potentially negative for gold.
Spot silver fell 0.3 per cent to $24.37 per ounce. Platinum eased 0.8 per cent to $1,047.11 and palladium dropped 1 per cent to $2,049.17.