Gold prices gained on Wednesday as investors keenly await key US inflation data for signs of how close interest rates are to peaking.

Spot gold was up 0.7% at $2,016.92 per ounce, as of 0400 GMT.

US gold futures rose 0.7% to $2,032.40. All eyes are on the US consumer price index (CPI) data, due at 1230 GMT, for clues on the Federal Reserve’s rate hike path.

Gold is considered an inflation hedge, but rising interest rates reduce the appeal of non-yielding bullion. Gold could continue to drift higher “as early birds place their bets on a soft inflation report,” said Matt Simpson, senior market analyst at City Index.

“A soft inflation print could send gold prices above $2,032 to mark a fresh YTD high, given the inverted yield curve, talks of soft growth and rise of geopolitical tensions across parts of Asia.”

Philadelphia Fed Bank President Patrick Harker on Tuesday said he feels the Fed may soon be done raising rates, while New York Fed President John Williams said the Fed’s policy path will depend on incoming data.

The CME FedWatch tool shows markets pricing in a 69.8% chance of a 25 basis point hike in May, following a strong US employment report last week.

Chicago Fed President Austan Goolsbee said the central bank should be cautious about raising rates in the face of recent banking stress.

Bullion had broken above $2,000 after the sudden collapse of two US regional lenders in March.

Gold gains as dollar pauses ahead of US inflation data

A “weaker US dollar and returning investment flows have been holding (gold) prices, ANZ said in a note. Spot silver climbed 1.1% to $25.34 per ounce, platinum added 0.8% at $1,002.26 and palladium gained 1.1% to $1,461.77.

“There’s plenty of corporate and bigger picture precious stories being dissected from US dollar dedollarization, People’s Bank of China adding to gold reserves and M&A deals,” metals firm MKS PAMP said in a note.