The inter-governmental body had previously forecast a global sugar deficit of 3.85 million in 2021/22.

The ISO, in a quarterly market outlook, put global consumption in 2021/22 at 173.03 million tonnes, down 1.44 million from its previous projection issued in August, although up 1.2% from the prior season.

"Downward revisions in national consumption totals reported by governments have been reflected in these latest figures, with lower tourism, domestic disturbances, and changing consumption patterns as contributing factors," the ISO said.

Global sugar production in 2021/22 was cut by 185,000 tonnes to 170.47 million tonnes, while stocks at the end of the season were seen at 93.25 million tonnes, down from 96.74 million a year earlier.

India's Oct.1 to Nov. 15 sugar output rises 24.3% y/y

"The global COVID-19 pandemic has changed perceptions around global stocks in the last two years. The anticipated closing balance...should confirm a substantial buffer," the ISO said.

"However, the desirability of holding stocks is proving strong, and will likely be a key driver for the remainder of the current 2021/22 cycle."

Spot gold was down 0.2% at $1,863.70 per ounce by 1226 GMT, while US gold futures eased 0.2% to $1,866.10.

The US dollar paused for breath, slipping back from a 16-month peak as traders assessed whether its recent surge was starting to stall. A weaker dollar makes gold more attractive for buyers holding other currencies.

"We've had a decent rise to the upside and yields are a bit firmer so that could be actually pushing gold prices down," said Michael Hewson, chief market analyst at CMC Markets UK.

"At the moment it's very uncertain what the Fed policy is likely to be. Given the direction of recent economic data and Federal Reserve Bank President James Bullard's comments, gold is in a holding pattern before the next Fed meeting."

St. Louis Federal Reserve bank president James Bullard on Tuesday said the Fed should "tack in a more hawkish direction" over its next couple of meetings.

Spot gold may revisit $1,876.90; pullback surprisingly shallow

Bullion, considered a hedge against inflation, has gained on the back a surge in consumer prices in the US and Europe. But that has also bolstered bets for early interest rate hikes, which would increase the opportunity cost of holding non-yielding gold.

"Until the Fed actually signals an accelerated taper, gold should hold its current $1,850 and $1,875 range with the potential appointment of Lael Brainard as the new Fed Chair, considered a super dove, likely to push it above $1,875," Stephen Innes, managing partner at SPI Asset Management.

Silver fell 0.2% to $24.99 per ounce. Platinum rose 0.3% to $1,060.07 per ounce, while palladium dipped 1% to $2,166.07.

Corn similarly ticked lower, with a firm dollar and US harvest progress encouraging grain markets to consolidate.

The most-active soybean contract on the Chicago Board Of Trade (CBOT) was down 0.2% at $12.55-1/4 a bushel by 1303 GMT, after climbing earlier in the session to its highest since Oct. 8.

The National Oilseed Processors Association on Monday said US soybean crush rose in October to 183.993 million bushels, the third-highest monthly volume on record and above the average of market forecasts.

A video call on Monday between US President Joe Biden and Chinese counterpart Xi Jinping has also spurred hopes that renewed dialogue could bolster Chinese buying of US soybeans.

"The market suspects that China's importers have and will make hefty purchases of US soybeans in that context," Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia, said.

Soybeans ease, strong demand curbs losses; wheat near multi-year high

The market will be monitoring any announcements of daily export sales under the US Department of Agriculture's (USDA) reporting system.

Private exporters reported the sale of 264,000 tonnes of soybeans to unknown destinations, the USDA said on Monday, in what was the biggest daily soybean sale in a month.

In a separate report on Monday, the USDA estimated that the US soybean crop was 92% harvested as of Sunday, in line with analyst expectations but behind the five-year average of 93%.

The US corn harvest was 91% complete, also matching the average estimate in a Reuters poll of analysts.

A headline rating for the US winter wheat crop improved to 46% good-to-excellent condition from 45% a week earlier, surpassing an average analyst expectation for no change.

CBOT wheat was down 0.3% at $8.24 a bushel but remained near its latest nine-year high of $8.29-1/2 set on Monday.

Corn ticked down 0.2% to $5.75-1/2 a bushel.

International demand for wheat has remained steady despite rising prices in major exporting countries. Traders were watching to see if Algeria would make a purchase in an import tender after traders said the country's grain agency pushed back an initial deadline of Monday.

Spot gold rose 0.6% to $1,873.67 per ounce by 1040 GMT, while U.S. gold futures climbed 0.5% to $1,875.70.

The metal has added more than 2% since last Tuesday after data showed U.S. consumer prices posted the biggest annual gain in 31 years last month.

"The notion that U.S. inflation has yet to peak should keep bullion well bid, as long as the Fed doesn't veer from its patient approach to any rates lift off," said Han Tan, chief market analyst at Exinity.

Gold's gains came despite the dollar holding close to a 16-month high and benchmark U.S. 10-year Treasury yields steadying near a three-week peak. A stronger dollar increases gold's cost to buyers holding other currencies.

"Gold is able to resist the headwind of a strong dollar and could rise to $1,900 by the end of the year," Commerzbank analyst Daniel Briesemann said.

Investors now eye U.S. retail sales data due at 1330 GMT, which could influence the Federal Reserve's stance on interest rates hikes. The data follows last week's weak consumer sentiment reading.

"Further signs that the U.S. economic recovery is waning amid persistently elevated consumer prices could prompt more investors towards gold as a safe haven," Exinity's Tan said.

US MIDDAY: Gold stalls near 5-month high

Richmond Federal Reserve President Thomas Barkin said on Monday the Fed will not hesitate to raise interest rates, but the central bank should wait to gauge if inflation and labor shortages prove to be more long-lasting.

Rate hikes tend to weigh on gold, as they push bond yields up, raising the metal's opportunity cost.

Spot silver rose 0.6% to $25.18 per ounce, platinum gained 0.9% to $1,096.97, and palladium climbed 0.7% to $2,168.87.