Gold ticks up with US inflation data on radar

Gold nudged higher on Tuesday as the U.S. dollar slipped, with investors focused on upcoming inflation data that could shape expectations for the Federal Reserve's next policy move.

Spot gold XAU= was up 0.1% at $4,407.27 per ounce, as of 0645 GMT. U.S. gold futures GCcv1 for December delivery fell 0.6% at $4,452.10.

The U.S. dollar index .DXY ticked 0.3% lower, making greenback-priced metals more affordable for other currency holders.

"Gold remains locked in a battle between buyers and sellers, with neither party showing enough conviction to drive a sustained and persistent directional move," said Chris Weston, head of research at Pepperstone Group.

The U.S. producer price index data is due on Thursday and the consumer price index report is scheduled for Friday.

Spot gold fell in the previous two sessions after data showed U.S. job growth accelerated sharply in August, while the unemployment rate held steady at 4.1%, suggesting an improvement in the labour market.

Traders see a 58.4% chance of a rate hike at the Fed's policy meeting next week, according to the CME FedWatch Tool. Elevated rates tend to reduce the appeal of non-yielding gold.

"We don’t see gold falling back too much if and when the central bank does raise rates. More important than the rate move is the notion that markets are somewhat uneasy about what the Fed and the Treasury are signalling," Marex analyst Edward Meir said in a monthly note.

On the geopolitical front, Iran threatened the United States with "economic warfare" and said it had fired an advanced missile at U.S. warships, underscoring the risks of further escalation only days after both sides traded blows again.

Among other metals, spot silver XAG= gained 0.1% to $66.21 per ounce, platinum XPT= fell 0.1% to $1,824.58 and palladium XPD= lost 0.2% to $1,385.50.