Spot gold dropped 0.1 per cent to $4,728.79 per ounce, after jumping to a three-week high earlier in the session

Gold prices were largely steady on Tuesday, as markets weighed the developments in the West Asia war and US interest rate expectations ahead of the country’s inflation data.

Spot gold dropped 0.1 per cent to $4,728.79 per ounce by 04:18 GMT, after jumping to a three-week high earlier in the session.

US gold futures for June delivery rose 0.2 per cent to $4,737.60. Hopes for a peace deal on Iran faded after the US president said a ceasefire with Iran was “on life support” as Tehran rejected a US proposal to end the war and stuck to a list of demands.

We’ve already seen expectations for a lot of central banks shift in a much more hawkish direction, and for the Federal Reserve, it’s meant a dropping of all rate cut possibilities for this year, said Ilya Spivak, head of global macro at Tastylive.

We’re really looking to what the US CPI (Consumer Price Index) numbers might give, and if there is a stronger inflationary impetus there than already expected, he said.

The data is expected later in the day and could give investors clues into the US central bank’s future monetary policy path.

Meanwhile, oil prices rose almost 1 per cent, while the U.S. dollar extended gains from the previous session.

Elevated crude oil prices can stoke inflation, increasing the likelihood of higher interest rates. While gold is seen as a hedge against inflation, high rates tend to weigh on the non-yielding asset. BofA Global Research and Goldman Sachs scaled back expectations of US interest rate cuts this year, citing elevated inflation due to high energy prices and growing strength in the labour market.