Spot gold was flat at $1,793.78 per ounce by 1032 GMT, after hitting its highest since July 5 at $1,800.29 on Tuesday. U.S. gold futures eased 0.1% to $1,809.90.
"If numbers confirm that inflation is set to ease, that could reduce the potential for peak U.S. interest rates," and eventually support gold, said Saxo Bank analyst Ole Hansen, attributing slight pressure on prices earlier in the session to profit-taking.
But the gold market is close to pricing in a 75 bps rate hike in the September meeting, and any deviations from that would impact prices, Hansen added.
Economists polled by Reuters expect U.S. annual inflation to have eased to 8.7% last month from 9.1% in June. Core inflation is expected at 0.5% month on month. The data is due at 1230 GMT.
Although gold is considered a hedge against inflation, recession risks and political uncertainties, higher U.S. interest rates dull the appeal of non-yielding bullion.
"Today's inflation number could set the tone for the markets for the rest of the month," OANDA analyst Craig Erlam said in a note.
"A lower than expected number could be a major tailwind for the markets, while anything around or above the June reading could trigger a big risk reversal... as the debate shifts to 75 or 100 basis points, with 50 left in the rearview mirror."
The Fed has hiked interest rates by 225 basis points since March as officials try to quash high inflation.
Spot silver fell 0.2% to $20.46 per ounce, while platinum eased 0.1% to $932.55. Palladium slipped 0.3% to $2,208.09.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Jason Neely and Jan Harvey)
By Arundhati Sarkar
