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May 9 Reuters Gold prices flitted in a narrow range on Tuesday ahead of U.S. inflation data, which investors will scan for clues on the Federal Reserve39;s policy path.

Spot gold was up 0.2 at 2,026.09 per ounce, as of 0639 GMT. Prices traded in a tight range of about 9.

U.S. gold futures were unchanged at 2,033.70.

U.S. consumer price index CPI data is due on Wednesday.

If the inflation report comes in hot and fans worries of another Fed rate hike in June, gold prices could eventually drop to the 1,9501,920 level, said Ajay Kedia, director at Mumbaibased Kedia Commodities.

Bullion is considered an inflation hedge, but higher rates dent the nonyielding asset39;s appeal.

However, traders are currently pricing in a 91 chance of the U.S. central bank holding rates at their current level in June.

U.S. consumers39; inflation expectations were mixed in April, the New York Federal Reserve39;s report showed.

Besides economic data, market participants are also monitoring developments surrounding the country39;s banking sector and its debt ceiling.

Fed survey data on Monday showed in the latest indication that higher interest rates were starting to bite in the finance sector.

If there is news of further stress in the banking sector, we will see gold move towards the 2,100 level, Kedia said.

Treasury Secretary Janet…