U.S. CPI data due Thursday
U.S. rates futures price in about 68 chance of March rate cut

Jan 10 Reuters Gold prices edged up on Wednesday, supported by a slightly weaker U.S. dollar ahead of a critical inflation report that could offer some clues on whether the Federal Reserve will begin cutting interest rates this year.

Spot gold gained 0.2 to 2,033.90 per ounce, as of 1148 GMT. U.S. gold futures rose 0.3 to 2,040.00 per ounce.

If the CPI figures exceed market expectations, perhaps forcing the Fed to delay its policy pivot, that could force bullion to relinquish more of its gains from the final quarter of 2023, said Han Tan, chief market analyst at Exinity Group.

However, further evidence of U.S. disinflation taking hold may propel spot gold closer to 2,100 in the immediate term.

The dollar index ticked down about 0.1 against a basket of currencies, making bullion more attractive for foreign currency holders. .DXY

The focus of investors now switches to Thursday39;s U.S. consumer and producer inflation numbers, which are expected to show that headline inflation rose 0.2 in December and 3.2 yearonyear. 

A New York Federal Reserve report revealed that consumers expect a decline in inflation, while Fed Governor Michelle Bowman reversed her longheld hawkish position on Monday, stating that U.S. monetary policy is now sufficiently restrictive.

According to the CME FedWatch Tool, the market currently expects about a 68 chance of a rate cut at the Fed39;s March 1920…