Dec 11 (Reuters) - Gold prices nudged higher to touch a two-week peak on Wednesday, supported by escalating geopolitical tensions and expectations of another rate cut by the Federal Reserve next week, ahead of a closely watched U.S. inflation report.

FUNDAMENTALS

* Spot gold was up 0.1% at $2,696.82 per ounce, as of 0023 GMT. U.S. gold futures rose 0.3% to $2,726.00.

* Investors are eyeing the U.S. Consumer Price Index $(CPI.UK)$ due later in the day, which could help set expectations for monetary policy in the coming year, and the Producer Price Index $(PPI)$ on Thursday.

* With two U.S. rate reduction so far this year, traders predict an 86% chance of a further 25-basis-point cut at the Fed's Dec. 17-18 meeting, according to the CME FedWatch tool.

* The U.S. Fed is likely to cut interest rates by 25 basis points on Dec. 18, according to 90% of economists polled by Reuters, with most expecting a pause in late-January amid concerns over inflationary risks.

* On the geopolitical front, the Israeli military said it struck most of the strategic weapons stockpiles in Syria and hit two Syrian navy facilities.

* Gold is considered a safe investment during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.

* Central bank buying, monetary policy easing, and geopolitical tensions have propelled gold to multiple record highs this year, putting the metal on track for its best performance since 2010, with a nearly 31% increase so far.

* Goldman Sachs on Tuesday reiterated its bullish stance on gold prices and pushed back on the argument that bullion cannot rally to $3,000 per ounce by end-2025 in a world where the dollar stays stronger.

* Spot silver added 0.1% to $31.93 per ounce, platinum steadied at $943.15 and palladium rose 0.4% to $971.44.

(Reporting by Rahul Paswan; Editing by Sherry Jacob-Phillips)

((RahulKumar.Paswan@thomsonreuters.com ; If within U.S. +1 646 223 8780;;))