May 28 (Reuters) -Australian shares were trading largely flat on Tuesday, as gains in mining and gold stocks were offset by losses in heavyweight banking stocks, while investors remained cautious ahead of the domestic inflation data due this week.

The S&P/ASX 200 index .AXJO was flat at 7,785.10 by 0102 GMT. It closed 0.8% higher on Monday.

Australia's consumer price inflation (CPI) data for April is scheduled to be released on Wednesday and it is expected to give more clarity on the central bank's interest rate trajectory.

The Reserve Bank of Australia (RBA), last week left the interest rates steady to avoid "excessively fine-tuning" policy, but judged a rate hike might be needed if forecasts on inflation proved too optimistic.

A Reuters poll of economists showed the median is for a slight easing in CPI to 3.4% from 3.5% in March.

Analysts at Westpac noted that the CPI reading is dominated by the goods component which has maintained a disinflationary trend, and an upside surprise on that front would rekindle some near term focus on RBA hike probabilities.

Mining stocks .AXMM were trading 0.5% higher, with the world's largest listed miner BHP Group BHP.AX up nearly 0.6%.

The gold sub-index .AXGD also advanced 0.9% in early trade. Gold prices had jumped 1% on Monday, as investors assessed diminishing bets of U.S. rate cuts. GOL/

However, rate-sensitive financials .AXFJ fell 0.2%, with Commonwealth Bank of Australia CBA.AX and Westpac WBC.AX down 0.1% and 0.2%, respectively. The other two of the "Big Four" banks wee largely flat.

Healthcare stocks .AXHJ were down about 0.4%, and technology sub-index .AXIJ fell 0.3%.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 was marginally up at 11,763.89.

The government budget is due on Thursday, where the fiscal deficit for the country is expected to worsen.

Reporting by Prerna Bedi in Bengaluru; Editing by Rashmi Aich

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