By Sherin Elizabeth Varghese

(Reuters) – Gold prices inched down on Monday as investors awaited key U.S. inflation reports, which could shed more light on the timing of the Federal Reserve’s first rate cut.

Spot gold fell 0.2% at $2,354.77 per ounce by 0448 GMT. Prices hit a two-week high in the previous session.

U.S. gold futures fell 0.6% to $2,361.

The U.S. producer price index (PPI) data is scheduled for release on Tuesday, followed by the consumer price index (CPI) on Wednesday.

Median forecasts are for core consumer prices to rise 0.3% in the month, compared with 0.4% in March, pulling the annual rate down to 3.6%, according to a Reuters poll.

“I suspect inflation will be stickier than people want to see, so we need to allow for a few bumps in the road – but that doesn’t necessarily mean inflation will rip higher,” said City Index senior analyst Matt Simpson.

“It just won’t disinflate as quickly as doves hope. And that could result in some choppy trade for gold prices around these highs, at a time of year usually associated with negative returns for gold prices.”

After a softer-than-expected U.S. payrolls report for April and a weak jobs report last week, expectations have increased for rate reductions this year.

Traders expect the U.S. central bank to start its easing cycle in September. Lower interest rates reduce the opportunity cost of holding gold.

But comments by Fed officials last week were varied as speakers debated whether interest rates were high enough. A jump in consumers’ inflation expectations, revealed in a survey on Friday, could further complicate the conversation.

Spot silver fell 0.4% to $28.03 per ounce, platinum inched down 0.1% to $992.89 and palladium was unchanged at $978.03.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala)