Gold prices edged lower on Wednesday as investors remained on the sidelines ahead of a key U.S. inflation print later in the day that could set the tone for the Federal Reserve’s September policy meeting.

Spot gold eased 0.2% to $2,460.87 per ounce, as of 0327 GMT. Prices hit a record high of $2,483.60 last month.

U.S. gold futures edged 0.3% lower to $2,500.30.

U.S. consumer price index data for July is due at 1230 GMT and expected to show month-on-month inflation accelerated to 0.2%, with the annual core slowing a tick to 3.2%. Retail sales data is scheduled for Thursday.

Gold might drop to $2,300 if (CPI) data doesn’t align with expected rate cuts, but in the long term, gold is likely to rise as U.S. economy weakens enough for the Fed to cut rates significantly, said Kyle Rodda, a financial market analyst at Capital.com.

Data on Tuesday showed that U.S. producer prices increased less than expected in July, reinforcing market view that cooling inflation will allow the Federal Reserve to cut interest rates soon.

Traders expect a 54% chance of a 50-basis-point U.S. rate cut in September, according to the CME FedWatch Tool.

Gold dips as investors book profits, US inflation data in focus

Atlanta Fed President Raphael Bostic said he wants to see “a little more data” before he’s ready to support lowering interest rates.

Gold, often used as a hedge against geopolitical risks, thrives when interest rates are low.

Investors are largely buying gold in anticipation of a retaliatory strike from Iran, but they unwind those positions if the strike doesn’t occur, added Rodda.

Only a ceasefire deal in Gaza stemming from hoped-for talks this week would hold Iran back from direct retaliation against Israel for the assassination of Hamas leader Ismail Haniyeh on its soil, three senior Iranian officials said.

Spot silver fell 0.6% to $27.68, platinum shed 0.5% to $931.73.

Palladium edged 0.1% higher to $939.25 after hitting its highest level since July 24 in the previous session.