Gold prices flat as investors gear up for US inflation report

Gold prices remained stable on Tuesday as market participants focused on August inflation figures for hints about a likely reduction in Federal Reserve interest rates this month.

FUNDAMENTALS

* Spot gold was flat at $2,504.98 per ounce, as of 0027 GMT. U.S. gold futures edged 0.1% higher to $2,533.70.


* Trader attention on Wednesday will turn towards the U.S. Consumer Price Index (CPI) data, which is expected to show underlying inflation remains on its meandering path back down toward the central bank's 2% goal, and the Producer Price Index (PPI) reading on Thursday. * According to a report from the New York Federal Reserve released on Monday, the U.S. public's expectations for inflation remained stable last month, even as current price pressures continued to ease. * Traders of Fed funds futures are now pricing a 70% chance of a 25-basis-point cut at the Fed's Sept. 17-18 meeting, and a 30% chance of a 50 bp reduction, according to the CME FedWatch Tool.

* Lower interest rates reduce the opportunity cost of holding a zero-yield bullion.

* Last week, a report showed U.S. employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested the labour market was not falling off a cliff to warrant a half-point cut. * Data on Monday showed that U.S. wholesale inventories increased less than initially thought in July amid a sharp rebound in sales, casting doubt on whether inventory investment would contribute to economic growth in the third quarter.

* Spot silver fell 0.2% to $28.29 per ounce, platinum gained 0.4% to $941.25 and palladium was slightly up by 0.1% at $945.75. * In company news, Anglo American hired financial advisers to sell two nickel mines in Brazil, the miner's country head, Ana Sanches, told journalists on Monday.

DATA/EVENTS (GMT)

0600 Germany HICP Final YY Aug

0600 UK Claimant Count Unem Chng Aug

0600 UK ILO Unemployment Rate July

0600 UK HMRC Payrolls Change Aug

China Exports YY Aug

China Imports YY Aug

China Trade Balance USD Aug.