Gold prices edged up on Wednesday as the dollar eased, while U.S. inflation data released on Tuesday raised expectations that the Federal Reserve will persist with monetary policy tightening.

FUNDAMENTALS

* Spot gold was up 0.1% at $1,856.47 per ounce, as of 0105 GMT. U.S. gold futures were little changed at $1,865.80.

* The dollar index eased 0.1%, making greenback-priced gold less expensive for buyers holding other currencies.

* The consumer price index increased 0.5% last month, the Labor Department said on Tuesday, in line with expectations. In the 12 months through January, the CPI increased 6.4% which was the smallest gain since October 2021 and followed a 6.5% rise in December.

* Fed officials said the U.S. central bank would need to keep gradually raising interest rates to beat inflation and suggested sticky price pressures driven by a hot jobs market may push borrowing costs higher than they once thought.

* Rising interest rates discourage investors from placing money in non-yielding assets like gold. * Money markets now expect the Fed’s target rate to peak at 5.257% in July, from a current range of 4.50% to 4.75%.

* European Central Bank governing council member Gabriel Makhlouf said the bank could increase interest rates above 3.5% and likely will not cut them again this year, in an interview with the Wall Street Journal.

* Spot silver edged up 0.1% to $21.86 per ounce and platinum rose 0.3% to $933.05. Palladium rose 0.3% to $1,501.08, after hitting its lowest since late-August 2019 in the previous session.