* Spot gold scaled highest level since June 5

* US CPI report due on Wednesday, PPI data on Thursday

* Trump demands Iranian reparations

(Updates prices and adds comments)

By Ashitha Shivaprasad

Aug 11 (Reuters) - Gold ticked lower on Tuesday after

hitting its highest level in more than two months, while

investors focused on upcoming inflation data for clues on the

U.S. interest-rate outlook.

Spot gold was down 0.3% to $4,374.82 per ounce by

0548 GMT, after hitting its highest level since June 5 earlier

in the session at $4,434.84.

U.S. gold futures rose 0.4% to $4,435.00.

Gold's move higher in early session trading beyond $4,400

appears to be driven primarily by renewed flows into the metal

and a notable shift in the metal market sentiment, said Ahmad

Assiri, Research Strategist at Pepperstone.

"If this change in sentiment continues to attract further

flows, it could remain an important factor in determining

whether gold can consolidate around $4,400 and potentially

extend the recovery towards higher levels."

The U.S. consumer price report due on Wednesday and producer

price data on Thursday are likely to shape monetary policy

expectations after weak July U.S. jobs data last week led

markets to scale back bets that the Federal Reserve would raise

rates next month.

At its July meeting, the Federal Reserve kept rates steady,

with three officials dissenting in favor of a hike.

Lower interest rates tend to support gold as bullion pays no

interest.

"If the data continue to point towards a cooling economy

without a meaningful resurgence in inflation, markets could

further reduce expectations for tighter policy. That would

likely leave the dollar vulnerable and provide another

supportive backdrop for gold," Fawad Razaqzada, a market analyst

at Forex.com, said in a note.

On the geopolitical front, U.S. President Donald Trump

responded to Iran's conditions for a peace deal with his own

demands that Iran pay compensation for people killed in wars,

attacks and protests, in a rhetorical escalation likely to

complicate efforts to reopen the Strait of Hormuz.

Among other metals, spot silver fell 1.7% to $64.64,

platinum lost 0.4% to $1,745.68 and palladium

declined 0.8% to $1,372.44.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by

Rashmi Aich, Subhranshu Sahu and Mrigank Dhaniwala)