Gold prices rose to a one-week high on Thursday, boosted by softer US inflation data that reinforced expectations of a Federal Reserve interest rate cut this year, while investors eyed a raft of other inflation data for further direction.

Spot gold was up 0.2% at $3,360.29 per ounce, as of 0838 GMT, after hitting its highest since June 5 the previous day.

U.S. gold futures were up 1.1% at $3,380.00.

The U.S. dollar index (.DXY), fell 0.3% to a near two-month low. A weaker dollar makes bullion cheaper for buyers holding other currencies.

"Gold remains on the back foot... with a break above $3,400 needed to turn it around. The near-term focus (is) on Middle East developments, the dollar and speculation about the timing of the next US rate cut," said Ole Hansen, head of commodity strategy at Saxo Bank.

Data showed the US Consumer Price Index rose 0.1% last month after rising 0.2% in April. Economists polled by Reuters had forecast the CPI rising 0.2% and rising 2.5% year-on-year.

Markets are now pricing in at least 50 basis points of rate cuts this year.

Gold, a safe haven, often thrives during times of economic uncertainty and in low interest rates.

Investors now turn their attention to the US Producer Price Index data due at 1230 GMT, ahead of the Federal Reserve's June 17-18 meeting.

"The PPI will be watched to see if it can surprise like the CPI or if expectations of rising input prices will be confirmed," Hansen added.

On the geopolitical front, US President Donald Trump said on Wednesday that US personnel were being removed from the Middle East because "it can be a dangerous place", adding that the United States would not allow Iran to have a nuclear weapon.

Elsewhere, spot silver was down 0.8% at $35.94 an ounce, platinum rose 0.3% to $1,260.14, holding at a more than four-year high, while palladium fell 1.9% to $1,059.25. (alg)

Source: Reuters