Gold rebounds towards 10-week high as markets brace for US CPI data

The U.S. Consumer Price Index data due later in the day could reshape the interest rate outlook. Fed Bank of Chicago President Austan Goolsbee said he is more concerned about too-high inflation than about any labour market weakness.

Oil extended gains as the U.S. and Yemen's Iran-aligned Houthis reported separate attacks on shipping on Tuesday, while prospects for ending the Iran war appeared to dim, with Tehran saying the Strait of Hormuz would remain closed unless Washington accepts its conditions.

Spot silver XAG= was up 0.8% at $65.20 per ounce, trading below its highest level since June 22, hit on Tuesday.

Platinum XPT= rose 0.2% to $1,748.03 and palladium XPD= gained 0.8% to $1,370.75.

Gold prices rose on Wednesday, supported by reduced bets on Federal Reserve tightening next month as investors awaited key U.S. inflation data that could reshape policy expectations.

Spot gold XAU= gained 0.6% to $4,391.82 per ounce by 0535 GMT. U.S. gold futures GCcv1 for December delivery rose 0.2% to $4,451.90.

Bullion climbed to a 10-week high on Tuesday before hitting technical resistance at the 100-day moving average around $4,387 and closing lower for the second time this month.

"The primary driver for gold is the reduction in pricing of rate hikes by the Fed," said Kelvin Wong, a senior market analyst at OANDA.

"In terms of technical positioning, we started to see a bullish break late last week above that $4,200 level, which also created a positive momentum feedback loop."

Bullion posted its largest weekly gain since January on Friday after weaker-than-expected jobs data led traders to scale back bets on U.S. rate hikes.