Gold retreats from three-month high as investors await US inflation data

On the geopolitical front, Iran promised to retaliate against expanded U.S. economic sanctions that Washington said would cut off Tehran's economic lifeline.

Among other metals, spot silver XAG= fell 1.3% to $68.01 per ounce, platinum XPT= lost 1.2% to $1,853.85 and palladium XPD= slipped nearly 1% to $1,345.26.

"Looking ahead, we expect dips in gold to be well-supported from buyers looking for gold to make its way towards the next upside resistance at $4,900/$5,000," IG market analyst Tony Sycamore said.

Prices rose sharply last week after the U.S. Treasury Department said it would double the size of liquidity support buyback operations for longer-dated notes and bonds. The announcement spurred currency debasement fears.

"These U.S. dollar debasement fears should see gold be well-supported in the coming weeks, as the Fed has not been sending a clear signal it is ready to fight higher inflation," TD Securities said in a note.

"However, it's too early for the metal to surge to our $5,350/oz target, given the risk rates on the short term may eventually rise as crude grinds higher."

Gold prices retreated on Tuesday after hitting their highest levels in more than three months earlier in the day, while investor focus shifted to upcoming U.S. inflation data and a speech later this week by Federal Reserve Chair Kevin Warsh.

Spot gold XAU= was down 0.2% at $4,640.39 per ounce, as of 0334 GMT. U.S. gold futures GCcv1 steadied at $4,696.00.