Gold prices edged down in range-bound trading on Wednesday due to a firmer dollar as investors assess the US Federal Reserve's rate hike trajectory after a closely-watched consumer prices report showed still-high inflation.
Spot gold was down 0.1 % at $1,900.97 per ounce as of 0712 GMT, trading in a $7 range. Prices had briefly slipped below the key $1,900 level earlier in the session.
US gold futures fell 0.3 % to $1,905.10.
"Some degree of relative calm on US banks and an overnight rise in Treasury yields may temporarily reduce demand for safe haven proxies" such as gold, said OCBC FX strategist Christopher Wong.
The dollar index was up 0.1 %, making bullion more expensive for buyers holding other currencies, while US Treasury yields ticked higher.
"As the focus shifts to the Federal Open Market Committee meeting next week, the question remains what guidance and how dots plot will evolve taking into consideration the recent development with some US banks versus combating inflation," Wong said.
The Fed is expected to raise its benchmark rate by 25 basis points next week and again in May, as a government report showed US inflation remained high in February, and concerns of a long-lasting banking crisis eased.
The US consumer price index (CPI) rose 0.4 % last month, after accelerating 0.5 % in January. In the 12 months through February, the CPI increased by 6 %.
Bullion is often seen as a hedge against inflation, but the opportunity cost of holding the non-yielding asset rises when interest rates are increased to bring down inflation.
"Investor allocation to gold remains low," analysts at ANZ said in a note, but added they expect the banking turmoil to "reinvigourate investor demand over the longer term."
Spot silver rose 0.2 % to $21.73 per ounce, platinum was 0.2 % higher at $984.59 and palladium was little changed at $1,507.60.