* Spot gold scaled highest level since June 5 earlier

* 10-year US Treasury yields at over one-week high

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

* Trump demands Iranian reparations

(Adds comment, updates prices)

By Pablo Sinha

Aug 11 (Reuters) - Gold prices steadied on Tuesday after

hitting a more than two-month high earlier in the session, as

investors awaited U.S. inflation data for clues on the Federal

Reserve's interest-rate path.

Spot gold was little changed at $4,386.13 per ounce

by 1135 GMT, after hitting its highest level since June 5

earlier at $4,434.84.

U.S. gold futures rose 0.6% to $4,444.70.

Yields on the benchmark 10-year U.S. Treasury note

rose to an over one-week high, increasing the

opportunity cost of holding bullion.

"The upcoming inflation data will significantly influence

the outlook for US interest rates. A hotter-than-expected

inflation print could justify the case for an interest rate hike

at the Fed's next meeting and, as a result, put further downward

pressure on gold prices," said Hamad Hussain, a climate and

commodities economist at Capital Economics.

Investors are awaiting U.S. consumer price data due on

Wednesday and producer price data on Thursday for further clues

on the Fed's policy outlook.

Traders are currently pricing a 48% chance of an

interest-rate hike in September, up from 44% on Monday,

according to the CME FedWatch Tool.

Cleveland Federal Reserve Bank President Beth Hammack said

on Monday she believed the time was right to begin raising

interest rates gradually so as to avoid the need for sharper

increases later.

While gold is seen as a hedge against inflation, it loses

its appeal as a non-yielding asset in a high-interest-rate

environment.

U.S. President Donald Trump responded to Iran's conditions

for a peace deal by demanding that Tehran pay compensation for

people killed in wars, attacks and protests. The comments added

to uncertainty over efforts to reopen the Strait of Hormuz.

"The precious-metals outlook is showing signs of improving,

not least underpinned by ongoing structural demand that helped

prevent a deeper correction, while the macro environment has

become more supportive and Western investors are showing

tentative signs of returning," Saxo Bank analyst Ole Hansen said

in a note.

Among other metals, spot silver fell 0.8% to $65.20,

platinum gained 1.1% to $1,772.05 and palladium

declined 0.3% to $1,379.08.