Gold retreated from its highest level in two months during Asian trading on Tuesday, with investors turning their attention to the United States consumer price index (CPI) report for the next major market catalyst.
By 4:10 pm AEST (6:10 am GMT), spot gold was trading 0.2% lower at US$4,382.40 an ounce.
Gold prices have been supported by falling expectations for a U.S. Federal Reserve rate hike following weaker-than-expected U.S.employment data.
The probability of a rate hike currently stands at 49.7%, according to the CME Group FedWatch Tool, following an unexpected decline of 23,000 in U.S. nonfarm payrolls in July last week.
However, a surge in oil prices overnight has revived inflation concerns, particularly after negotiations between the U.S. and Iran over a peace deal and the reopening of the Strait of Hormuz reached an impasse.
In a post on Truth Social on Monday, U.S. President Donald Trump demanded compensation from Iran "for all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts, for which they are famous, as led initially by General Soleimani, including the families of those killed on the USS Cole, and thousands of others killed in combat".
"Additionally, compensation should be paid to the families of the hundreds of thousands of innocent protestors that Iran has killed over the last 50 years, not to mention the 52,000 that have been killed in the last five months," he added.
