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Oct 10 Reuters Gold prices edged down on Tuesday after clocking a sharp rise in the last session as risk sentiment improved and bond yields rebounded, while investors awaited the U.S. inflation data due later this week.

Spot gold climbed to 1,865.19 per ounce, its highest since Sept. 29, earlier in the day and was last down 0.3 at 1,855.10 by 1217 GMT.

U.S. gold futures climbed 0.2 to 1,868.70.

Gold rose about 1.6 on Monday, its biggest oneday jump in five months, as military clashes between Israel and Palestinian Islamist group Hamas boosted demand for safehaven investments.

Markets remain responsive to further signs of escalation and further events that unfold over the coming days. But for now, it seems that markets have settled down, said Craig Erlam, senior markets analyst at OANDA.

Gold has run into resistance at 1,865, with some initial profit taking on the back of two very positive days backed by risk aversion and the U.S. Federal Reserve39;s balanced commentary, Erlam added.

European stocks rebounded sharply on Tuesday as dovish comments from Fed policymakers and easing oil prices helped calm investor nerves.

The military conflict in the Middle East is threatening more volatility for investors, adding to uncertainty ahead of the corporate earnings season and crucial U.S. Consumer…