Gold prices held on Thursday near a one-week high hit in the previous session, as the US dollar and Treasury yields retreated after inflation data in line with expectations reinforced the need for quicker interest rate hikes.
Spot gold was flat at $1,825.74 per ounce, as of 0502 GMT. US gold futures were down 0.1% at $1,826.10.
"There's a little window here for gold to go higher, but as we start to move towards the latter part of the month, we're either going to a seasonality bounce in gold or the market gets more fearful that the Fed will continue to stamp out inflation and increase velocity of hiking rates," said Stephen Innes, managing partner at SPI Asset Management.
"If the market doesn't catch up to the Fed's pricing of 2% (interest rate), gold will probably remain supported. But will it go higher? That's the big question. We need to have some more convincing walk back from the Fed narrative," Innes said, referring to the catalyst for gold to move out of its current trading range.
US consumer prices surged in December, with the annual increase in inflation the largest in nearly four decades, cementing expectations the Federal Reserve will start raising interest rates as early as March.
Following the inflation reading, the dollar weakened to a two-month low, making gold more attractive for overseas investors.
US benchmark 10-year yields also slipped, moving away from two-year highs hit earlier in the week. Lower yields reduce the opportunity cost of holding non-interest bearing gold.
Gold is considered an inflationary hedge, but the metal is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.
Spot silver was up 0.3% at $23.17 an ounce, platinum was flat at $977.49, and palladium remained flat at $1,909.67.