Gold prices inched up in Dubai on Wednesday morning, as traders positioned themselves for key US inflation data due later in the day, which could impact the Federal Reserve's policy stance.

Spot gold was trading at $2,030.27 per ounce at 9.25 am UAE time.

In the UAE, the 24K gold was trading at Dh246.0 per gram on Wednesday morning, up half a dirham from last night’s close of Dh245.5 per gram. Among the other variants of the precious metal, 22K was trading at Dh227.75, 21K at Dh220.5 and 18K at Dh189.0.

The US consumer price index (CPI) data is due at 4.30 pm UAE time. Economists polled by Reuters expect a 5.5 per cent year-on-year increase in core consumer prices for April.

If US inflation remains moderately controlled, it may lead to a pause in Fed rate hikes, which will weaken the dollar and support gold, Hareesh V., research head of Geojit Financial Services, told Reuters.

Markets are currently pricing in an 83 per cent chance of the US central bank holding rates at their current level in June.

On Tuesday, Fed Governor Philip Jefferson said the US economy is slowing in an "orderly fashion", while New York Fed President John Williams said it is too soon to say whether the US central bank is done raising interest rates.

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