By 0903 GMT, spot gold had increased by 0.2% to $2,683.62 per ounce, while U.S. gold futures rose by 0.7% to $2,701.80.
The dollar index fell by 0.1%, enhancing the appeal of bullion for holders of other currencies. Additionally, the benchmark 10-year Treasury yields also experienced a decrease.
The U.S. Consumer Price Index (CPI) data is scheduled for release at 1330 GMT. A Reuters survey anticipates a year-on-year increase of 2.9%, compared to 2.7% in November 2024, along with a month-on-month rise of 0.3%.
The market remains cautious, awaiting the CPI data to assess its potential influence on interest rate cuts, while the impending inauguration of President Trump adds to market volatility, providing some support for gold, according to Ole Hansen, head of commodity strategy at Saxo Bank.
Should the CPI data come in lower than expected, it may lead the market to believe that rate cuts are still on the table, with current pricing reflecting a possibility of one cut this year, he noted.
Data released on Tuesday indicated a modest rise in U.S. producer prices for December, but this is not expected to alter the prevailing view that the U.S. central bank is unlikely to reduce rates before the latter half of this year, given the resilience of the labor market.
As President-elect Donald Trump prepares to begin his second term next week, investors are concerned about his commitment to imposing tariffs on a broad array of imports, which could exacerbate inflation and further restrict the Fed's capacity to lower rates.
Non-yielding bullion serves as a hedge against inflation, although rising interest rates can diminish its attractiveness.
Spot silver increased by 0.4% to $30.00 per ounce, while platinum remained steady at $935.60, and palladium rose by 0.2% to $941.25.