Gold steadies after scaling two-month high; markets await inflation data

While gold is seen as a hedge against inflation, it loses its appeal as a non-yielding asset in a high-interest-rate environment.

U.S. President Donald Trump responded to Iran's conditions for a peace deal by demanding that Tehran pay compensation for people killed in wars, attacks and protests. The comments added to uncertainty over efforts to reopen the Strait of Hormuz.

"The precious-metals outlook is showing signs of improving, not least underpinned by ongoing structural demand that helped prevent a deeper correction, while the macro environment has become more supportive and Western investors are showing tentative signs of returning," Saxo Bank analyst Ole Hansen said in a note.

Spot gold steadied on Tuesday after hitting a more than two-month high earlier in the session, as investors awaited U.S. inflation data for clues on the Federal Reserve's interest-rate path.