Gold prices fell during trading on Wednesday, as investors awaited the main US inflation report due later in the day, which may give markets more signals about the future of monetary policy in the United States.

US CPI data for July is due at 15:30 Riyadh time, and is expected to show inflation accelerating on a monthly basis to 0.2%, with the annual basis slowing slightly to 3.2%. Retail sales data is due on Thursday.

Gold could fall to $2,300 if CPI data doesn't match expected rate cuts, but in the longer term, the yellow metal is likely to rise as the U.S. economy weakens enough for the Fed to cut rates significantly, said Kyle Rodda, a financial market analyst at Capital.com.

Data on Tuesday showed that the U.S. producer price index rose less than expected in July, reinforcing the market's view that slowing inflation will allow the Federal Reserve to cut interest rates soon.

Traders see a 54% chance of a 50 basis point rate cut in September, according to the US interest rate tracker available on Investing Saudi Arabia.

Atlanta Federal Reserve President Raphael Bousik said he wants to see more data before he is ready to support a rate cut.

Gold is often used as a hedge against geopolitical risk, and thrives when interest rates are low.

Gold at settlement yesterday

Gold futures prices turned higher during trading on Tuesday, as the dollar and US bond yields declined, following the release of economic data that boosted hopes that the Federal Reserve will end its monetary tightening cycle in September.

At settlement, gold futures for December delivery rose 0.15%, or $3.8, to $2,507.8 an ounce, with the most active yellow metal contract hitting a new record high for the third time this month.

Gold and dollar now

Gold futures are now down 0.28% at $2,500 an ounce.

While spot gold contracts fell by about 0.15% to $2,461 per ounce.

On the other hand, the dollar index rose by 0.13% to 102.50 points.

Other minerals

Spot silver fell 0.4% to $27.73 an ounce, while platinum fell 0.5% to $931.50 an ounce.

Palladium rose 0.3% to $941.00 an ounce after hitting its highest since July 24 in the previous session.