Gold prices edged up in choppy trading on Wednesday after relatively tame U.S. inflation readings prompted bets that the Federal Reserve may not opt for aggressive rate hikes.
Spot gold rose 0.2% to $1,797.29 per ounce by 10:19 ET (1419 GMT), but gave up some gains after rising to its highest since July 5 after the CPI data.
U.S. gold futures were little changed at $1,813.00.
U.S. consumer prices did not rise in July, due to a sharp drop in the cost of gasoline. Consumer Price Index (CPI) was unchanged last month after advancing 1.3% in June.
"Gold initially had a knee-jerk reaction after tamer inflation data as investors expected a less aggressive Fed. But, then they realized the data is tamer not tame," said Jim Wyckoff, senior analyst at Kitco Metals.
"The near term technical posture for the gold market has turned more bullish recently, that's inviting speculative buyers. The next upside price objective for the bulls is the $1,850 level and above that, $1,900."
Non-yielding gold tends do well in a low-interest rate environment.
"The next big factor for the gold market will be Fed officials' comments and hints on path of rate hikes," said David Meger, director of metals trading at High Ridge Futures.
Also helping gold, the dollar index fell over 1%, bolstering its appeal among overseas buyers. U.S. Treasury yields also plunged after the data.
Goldman Sachs, meanwhile cut its three-, six- and 12-month gold price forecasts to $1,850, $1,950 and $1,950 an ounce from $2,100,$2,300 and $2,500, respectively, and said "structurally, gold is likely to remain range-bound as growth and tightening factors continue to offset each other."
It also cut its silver price forecasts.
Spot silver rose 0.9% to $20.68 per ounce, while platinum gained 0.4% to $937.74.
Palladium advanced 1.2% to $2,240.85.