Gold prices edged higher on Tuesday, after a sharp selloff in the previous session, as investors focused on U.S. inflation data that could shape the Federal Reserve's rate-cut timeline.

Spot gold was up 0.2% at $3,349.13 per ounce, as of 0904 GMT. U.S. gold futures for December delivery were steady at $3,398.90.

Bullion slid 1.6% to a more than one-week low on Monday, while futures dropped more than 2%, after U.S. President Donald Trump ruled out tariffs on imported bullion.

Comex front-month gold futures are now in line with London spot after a near $40/ounce premium on Friday, said Nitesh Shah, commodities strategist at WisdomTree.

"However, in the absence of an official statement, this convergence may prove temporary, and the two prices could diverge again if uncertainty resurfaces," he said.

The U.S. consumer prices index report is due at 1230 GMT later in the day and producer prices data is due on Thursday.

Economists in a Reuters poll expect core CPI to have risen 0.3% in July, pushing the annual rate to 3%, drifting further away from the Fed's 2% target.

"After recent surprise weak labor data, if inflation numbers come in softer, market expectations for a rate cut are likely to rise, which would support gold," said ANZ Commodity Strategist Soni Kumari.

CME's FedWatch Tool, opens new tab shows markets are pricing in an 85% chance of a rate cut next month. Looser monetary policy, coupled with political and economic uncertainty, tends to benefit gold.

Attention is also shifting to the Fed's leadership beyond the current cycle, with Chair Jerome Powell's term ending next May.

Trump has spent much of the year unsuccessfully pressing for deeper rate cuts, and speculation is building over who might succeed Powell.

Meanwhile, Trump extended a tariff truce with China by 90 days.

Elsewhere, spot silver gained 0.6% to $37.81 per ounce, platinum rose 0.8% to $1,336.84 and palladium climbed 1.5% to $1,152.68.

Source: Reuters