Gold traders in wait-and-watch mode ahead of U.S. inflation data

(Reuters) - Gold prices were steady on Thursday as cautious investors held to the sidelines and awaited key U.S. inflation report to gauge the size of the Federal Reserve's future interest rate hikes.

FUNDAMENTALS

* Spot gold was flat at $1,705.77 per ounce, as of 0032 GMT. U.S. gold futures fell 0.3% to $1,709.20.

* The U.S. consumer price index (CPI) report for October due at 1330 GMT could likely provide some cues on the Federal Reserve's rate hike plan.

* Economists are expecting a deceleration in both the monthly and yearly core inflation to 0.5% and 6.5%, respectively.

* Rising interest rates increase the opportunity cost of holding bullion, while lifting returns on other yielding assets.

* Federal Reserve Bank of New York President John Williams welcomed the relative stability of longer-term inflation expectations on Wednesday while signaling some puzzlement over data showing a notable number of Americans expect an outright decline in price pressures at some point.

* Inflation expectations among euro zone consumers continued to rise in September, even as economic growth and income forecasts declined markedly, a new European Central Bank survey showed on Wednesday.

* Spot silver was flat at $21.00. Platinum rose 0.1% to $985.90 and palladium was up 0.2% to$1,867.75.

DATA/EVENTS (GMT)

1330 US CPI MM, SA Oct

1330 US CPI YY, NSA Oct

1330 US Initial Jobless Clm Weekly

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips)