Gold edged higher as investors assess the outlook for US interest rates following inflation data on Wednesday that supported the case for a cut next month.

Bullion rose 0.5% to $2,648.21 an ounce as of 10:53 a.m. in London, with pressure on the metal easing as a rally in the dollar lost steam. The greenback, which strengthened in the wake of President-elect Donald Trump's win, has weakened this week against other currencies amid month-end flows. A stronger dollar makes the metal more expensive for many buyers.

The case for a December rate cut was bolstered by Wednesday's core personal consumption expenditures price index, the Federal Reserve's preferred measure of underlying inflation, which increased in line with expectations. Traders are now pricing in a 70% chance of a quarter-point cut next month, up from about even odds earlier this week. Lower borrowing costs typically benefit gold, as it doesn't pay interest.

The bullion market has been relatively calm following Monday's 3.4% slump, which came on news Israel and Lebanese militant group Hezbollah were preparing a 60-day suspension of hostilities that started early Wednesday. Easing geopolitical tensions diminish gold's appeal as a haven asset. 

Still, conflicts elsewhere could bolster safe haven demand for gold over the coming months. On Thursday morning, Russia targeted Ukraine's power system in a new air assault, the second large-scale barrage this month. 

"Even after the Israel-Hezbollah deal, a fair amount of uncertainty remains in the Middle East and Europe, which could keep safe-haven buying supportive for gold in the medium term," Ewa Manthey, a commodities strategist with ING Bank, said in a note.

The Bloomberg Dollar Spot Index was steady, following a 0.7% decline in the previous session. Silver was little changed, while platinum and palladium rose.

Source : Bloomberg