Gold prices rose on Wednesday, hovering below a near five-month peak hit in the previous session, as US Treasury yields pulled back, while investors awaited for key economic data this week that will shed light on the outlook for inflation.

Spot gold rose 0.2% to $1,903.85 per ounce, as of 9:58 a.m. EDT (1358 GMT), after hitting its highest since Jan. 8 at $1,916.40 on Tuesday. US gold futures firmed 0.3% to $1,911.20.

"At this point it's the anticipation of some of the economic news that's coming out this week ... which is going to further the concerns regarding inflation and will have a positive impact on the momentum in the gold market," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

"The Treasuries have been relatively calm considering the inflation news," Sica said, adding that momentum in the stock market is preventing gold from breaking higher.

Benchmark, US 10-year Treasury yields eased below 1.60%, reducing the opportunity cost of holding bullion, which pays no interest.

Stock markets hovered near record highs as investors cheered the latest evidence of a sustained rebound in global economies and as stronger oil prices lifted energy stocks.

Investors were now awaiting US payrolls data due on Friday to gauge cues on future monetary policy.

Capping gold's advance, however, the dollar index firmed 0.2%, making gold expensive for other currency holders.

Bottlenecks in the supply chain and rising commodity prices could limit US manufacturing growth potential, and the Federal Reserve is paying attention to labour market data, Commerzbank analyst Daniel Briesemann said.

On the physical front, Australia's Perth Mint posted a 10% drop in May gold coin sales.

Among other precious metals, palladium fell 0.3% to $2,850.06 per ounce, silver gained 0.1% to $27.92, and platinum slipped 0.5% to $1,186.49.