Gold edges lower as focus shifts to US inflation data

Gold prices dipped on Tuesday as investors cashed in on a more than 1% rally in the previous session, in advance of US inflation data that could provide insights into the Federal Reserve's policy direction. Spot gold fell 0.6% to $4,115.12 an ounce as of 0238 GMT, while US gold futures for December delivery slipped 0.2% to $4,123.90.

Market analyst Kyle Rodda explained that the price movement was simply a "bit of churn in the market" as the market settled after the US session's highs. Rodda also noted that if the US avoids escalating the Middle East conflict and oil prices decline, that could be advantageous for gold due to its influence on the dollar, inflation, and interest rate expectations.

On Monday, US President Donald Trump stated that he intended to halt new military strikes against Iran for now, following appeals from regional countries, including Qatar's prime minister in White House talks. Oil prices fell slightly on Tuesday, continuing their losses from the previous day. Meanwhile, the Federal Reserve is expected to handle monetary policy "with caution" as it determines a response to inflation, which remains the central bank's primary risk, according to Richmond Federal Reserve President Tom Barkin.

He added that he had no specific plan for the December meeting. Currently, traders estimate an 84% probability that the US Federal Reserve will raise interest rates in December, as per CME's FedWatch tool. Higher interest rates raise the opportunity cost of holding non-yielding gold, diminishing its appeal to investors. Investors are now looking forward to the consumer price index (CPI) report later today, followed by producer price index (PPI) data on Friday.

Silver prices dropped 0.6% to $53.04 per ounce, platinum fell 0.3% to $1,571.70, and palladium declined 0.4% to $1,037.50.