Gold prices hovered on Wednesday near their highest level in more than a month, supported by a weaker dollar with investors awaiting US inflation data, which is expected to influence the pace of Federal Reserve rate hikes.
Spot gold held its ground at $1,793.39 per ounce, as of 0318 GMT, after hitting its highest since July 5 at $1,800.29 on Tuesday.
US gold futures were down 0.1 per cent at $1,810. The dollar index weakened 0.1 per cent against its rivals, making gold less expensive for other currency holders.
"Clearly the focus is on US inflation data. Also, what's really important is that where prices are currently trading with $1,800 being the very important level here," said Ilya Spivak, a currency strategist at DailyFX.
"If inflation number come in stronger than expected, following last week's solid jobs report, we could see some of rate cut expectations for next year leave the forecast, which would be gold negative."
Economists polled by Reuters expect US annual inflation to have eased to 8.7 per cent last month from 9.1 per cent in June. Core inflation is expected at 0.5 per cent month-on-month . The data is due at 1230 GMT.
The Fed hiked rates by 75 basis points each in June and July to rein in soaring inflation.
Although gold is seen as a hedge against inflation, higher US interest rates dull non-yielding bullion's appeal. Fed funds futures traders are now pricing for a 67.5 per cent chance of another 75-basis-point rate increase at the US central bank's next policy meeting in September.
"Central banks have warned that further rate hikes will be required to tame persistently high inflation. Investors expect July's consumer price index to cool a bit," ANZ analysts said in a note. "However, strong wage growth and higher labour costs could undermine this."
Spot silver eased 0.2 per cent to $20.47 per ounce, platinum fell 0.4 per cent to $930.14, and palladium edged 0.1 per cent higher to $2,217.40.
Deccan Herald is on WhatsApp Channels| Join now for Breaking News & Editor's Picks