* Heightened geopolitical risk supportive for gold - analyst
* Russia evacuates another border region next to Ukraine
* Palladium up over 3%
Aug 12 (Reuters) - Gold prices inched higher on Monday on U.S. interest rate cut optimism and brewing geopolitical tensions, while traders looked to key U.S. inflation data due later this week for more monetary policy cues.
Spot gold rose 0.5% to $2,442.38 per ounce as of 0856 GMT. U.S. gold futures gained 0.3% at $2,481.50.
Investors are pricing in a 49% chance of a 50 basis points (bps) rate cut by the Federal Reserve in September, as per the CME Group's FedWatch tool. The U.S. producer and consumer prices numbers due on Tuesday and Wednesday will be scanned for further cues.
"The inflation point, will, in my view, define if is a 25 bps or 50 bps cut. So the outcome of the inflation data will result in some higher volatility in gold prices," UBS analyst Giovanni Staunovo said.
"For gold to reach a new record high, inflation needs to be below market expectations."
Zero-yield bullion is more appealing to investors in a low-interest rate environment.
Fed Governor Michelle Bowman on Saturday softened her usually hawkish tone ever so slightly, noting some further "welcome" progress on inflation in the last couple months even as she said inflation remains "uncomfortably above" the Fed's 2% goal.
Heightened geopolitical risk and volatility in other markets remains supportive for gold, Mike Ingram, market analyst at Kinesis Money, said.
"Gold’s technical position appears to be more constructive than that of silver with the next major resistance level near all-time highs at $2,468," he added.
Russia evacuated civilians from parts of a second region next to Ukraine after Kyiv increased military activity near the border. Palestinian militant group Hamas on Sunday asked mediators to present a plan based upon previous talks instead of engaging in new negotiations for a Gaza ceasefire deal.
Spot silver rose 1.5% to $27.86 per ounce, platinum added 1.7% to $937.80 and palladium was 3.1% higher at $933.21. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Janane Venkatraman )
