Trade talks between the Fed and China under discussion

Gold prices edged up on Thursday, as weak US inflation data has raised fears that the Fed will suspend its rate hikes this year as investors wait for Washington's trade talks to evolve and Beijing.

Spot gold was up 0.2% at $ 1.308.39 per ounce, from 0256 GMT. US gold futures dropped 0.3% to $ 1,311.

Consumer prices in the United States remained unchanged for a third consecutive month in January, resulting in the lowest annual increase in inflation since more than a year and a half, which could allow the Reserve federal government to keep interest rates stable for some time.

"If you look more broadly, it is unlikely that the Fed will raise rates in an environment where inflation is still low," said Ilya Spivak, strategist in charge of the currency at DailyFX.

The technical support for gold is dense between $ 1,294 and $ 1,307, he added.

The price of gold hit its highest level in a week, to $ 1,318.12 on Wednesday, but slightly reduced its gains at the end of the session thanks to the strength of the dollar.

The dollar benefited from the sustained strength of underlying inflation in the United States. In the last 12 months, the core CPI rose 2.2% for a third consecutive month.

"The data was favorable for the dollar.You can see intraday drops (in gold on the data), but there is not enough juice for a gold breakout," Spivak said.

Gold prices have risen nearly 13% since their 1-1 / 2 year low in mid-August, mainly on the prospect of a pause in interest rate and stock market hikes tumultuous.

The US central bank maintained its rates at the end of January and promised to be "patient" in rate developments because of the impending slowdown and the uncertain business environment.

Several Fed officials have indicated that they would support a pause in rising interest rates in order to badess its impact on the economy.

Lower interest rates reduce the opportunity cost of holding non-interest bearing gold and weigh on the dollar.

At the same time, investors were hoping for a breakthrough in the trade stalemate between the United States and China.

US President Donald Trump said on Wednesday that talks with China "were going very well" as they tried to resolve the tariff dispute before March 1st.

While the strong dollar and risk appetite face several negative factors for gold, worries about global growth continue to support prices, badysts said Phillip Futures, based in Singapore.

As gold failed to skyrocket, capital outflows from SPDR Gold Trust, the largest gold-backed global ETF, rose. Assets have fallen more than 3% so far this month.

Elsewhere, palladium rose 0.4% to $ 1,400 an ounce.

Platinum was up 0.1% to $ 784 an ounce, while silver was up 0.4% to $ 15.63.