(Reuters) - Gold prices inched up on Thursday following a sharp rise in the previous session as the dollar and bond yields weakened after the U.S. consumer inflation data boosted the likelihood of rate cuts by the Federal Reserve as early as September.

Spot gold rose 0.2% at $2,391.78 per ounce, as of 0553 GMT, after hitting its highest in over three weeks on Wednesday. U.S. gold futures rose 0.1% to $2,396.10.

The dollar eased against a basket of other major currencies, making the greenback-priced bullion less expensive for other currency holders. The benchmark 10-year Treasury yield also touched its lowest in more than one month. [USD/][US/]

"With inflation coming off the boil, gold is effectively making hay while the sun is shining and looks poised to capture the $2,400 level," said Tim Waterer, chief market analyst at KCM Trade.

"However, a potential bounce in the dollar or treasury yields could be the biggest hurdle for gold price in the remainder of the week."

Cooling U.S. consumer prices along with last week's lacklustre jobs report and a softer-than-expected U.S. payrolls report for April comes as good news to Fed policymakers waiting to see renewed progress on inflation before reducing borrowing costs.

Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.

Spot silver fell 0.4% to $29.56 per ounce, having hit its highest since February 2021 earlier in the session.

"Silver is catching up with gold. Strong fundamentals amid rising gold prices are likely to spur investor interest in silver," analysts at ANZ wrote in a note, adding that they expect the metal to trade above $31 by the end of 2024.

Palladium lost 0.2% to $1,009.68 and platinum rose 0.5% to $1,068.67, hitting its highest since May 22 last year.

"Platinum reached price parity with palladium, driven by its growing use in auto catalysts for gasoline-powered cars," ANZ added.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Janane Venkatraman and Sohini Goswami)

By Sherin Elizabeth Varghese