Gold prices edged higher in New York close on Wednesday as the dollar slipped and expectations for the number of US interest rate hikes next year dimmed, increasing the appeal of non-interest yielding bullion. Spot gold was up 0.1 percent at $1,244.40 per ounce as of 1:41 p.m. EST (1841 GMT). US gold futures settled up $2.80, or 0.22 percent, at $1,250.
The dollar was weaker against a basket of currencies after data showed US consumer prices were unchanged in November, supporting the view that underlying inflation remained firm, but not enough to push the Federal Reserve to take a more aggressive stance.
"We are seeing a bit of support from a weaker dollar across the commodities complex," said David Meger, director of metals trading at High Ridge Futures. "In addition to that, we are seeing an ongoing outflow of funds from equities and that money flow into alternative assets continues to support the precious metals complex."
Investors kept an eye out for developments around US-China trade talks, and on Brexit after lawmakers in British Prime Minister Theresa May's Conservatives gathered enough support to trigger a no-confidence vote in her leadership on Wednesday. "The safe-haven assets continue to be well supported in this environment and that along with some recent comments from the Fed on changing their potential path on interest rates has also been supportive," Meger said.
Markets are not expecting more than one rate hike from the US central bank next year, after a likely interest rate increase at the Federal Open Market Committee (FOMC) meeting on Dec. 18-19. Gold is likely to further consolidate below the 200-day moving average, currently around $1,255, Commerzbank analysts said in a weekly note.
Indicative of investor interest in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to the highest level since late August on Tuesday.
Meanwhile, spot palladium was trading at a premium to gold, with prices of the autocatalyst metal rising about 1.5 percent to $1,262 an ounce. Palladium has climbed about 19 percent so far this year. Spot silver rose 1.4 percent to $14.73 per ounce, having earlier hit its highest price since Nov. 2, at $14.77. Platinum jumped 2 percent to $798 per ounce.