Aug 10 (Reuters) - Gold inched lower on Monday after prices hit a seven-week high in the previous session, pressured by a stronger dollar, while investors look ahead to inflation data for fresh clues on the central bank's policy path.
Spot gold was down 0.2% at $4,332.68 per ounce, as of 1122 GMT. Prices hit their highest since June 17 on Friday after weak U.S. nonfarm payrolls data.
U.S. gold futures fell 0.2% to $4,391.60 on Monday.
The dollar gained 0.2%, making greenback-priced bullion more expensive for holders of other currencies.
"Gold remains capped by the U.S.–Iran conflict and tensions in the Strait of Hormuz. These developments are keeping the threat of higher energy prices and inflation alive, shielding the greenback from further losses and creating a headwind for bullion," said ActivTrades senior analyst Ricardo Evangelista.
Oil prices edged higher on optimism over talks to reopen the Strait of Hormuz, though gains were capped by Iran's insistence that the United States must satisfy several demands before the waterway can reopen.
Elevated oil prices could stoke fears around inflation and higher-for-longer interest rates. While gold is traditionally seen as an inflation hedge, it loses its appeal in a high-interest-rate environment.
Data showed the U.S. economy unexpectedly shed jobs in July, while previously reported job gains for the prior two months were revised sharply lower.
Traders are now pricing a 44% chance of a rate hike in September, compared to 57% before the jobs report, according to the CME FedWatch Tool. FEDWATCH
Investors are now awaiting U.S. consumer price data due on Wednesday and producer price data on Thursday for further clues on the Fed's interest-rate outlook.
Economists polled by Reuters expect the July consumer price index to have risen 3.4% year-on-year, compared with 3.5% in June.
"A headline figure below the consensus forecast of 3.4% could further reduce expectations of a Fed rate increase before the end of the year, weakening the dollar and creating upside potential for gold," said Evangelista.
Spot silver rose 0.6% to $63.94 per ounce, while platinum fell 0.5% to $1,736.20, and palladium lost 1.5% to $1,357.
Reporting by Pablo Sinha in Bengaluru; Editing by Leroy Leo
