On Wednesday, gold prices rose after reports showed signs of cooling inflation. This development led to a greater expectation of a pause in U.S. rate increases, though

traders were still preparing for one more hike in May as they awaited the release of the Federal Reserve's March meeting minutes.

As of 1:34 p.m. EDT, spot gold XAU= had risen 0.4% to $2,010.42 per ounce, having peaked at a 1.3% increase earlier. U.S. gold futures GCv1 also increased by 0.3% to $2,025.30.

The Consumer Price Index (CPI) rose by 0.1% in March, compared to February's increase of 0.4%, falling short of the 0.2% gain forecast in a Reuters poll. However, the core CPI gained 5.6% over the past 12 months, following a 5.5% increase in February.

Edward Moya, senior market analyst at OANDA, believes the risks of not raising rates enough outweigh the risk of over-tightening, which is why the quarter-point rate hike may still proceed. Moya states that "there's still a tremendous amount of risk on the table, so gold should still see some strong flows headed its way."

The decline in the dollar and U.S. yields US10YT=RR contributed to gold's rise. Meanwhile, markets are anticipating a 71% chance of a 25-basis-point rate hike in the May meeting, followed by 2-to-1 bets of a pause in June.

Gold is viewed as a hedge against inflation, so higher rates to tame price pressures will weigh on the non-yielding asset's appeal. Traders are now awaiting the Fed's March meeting minutes, which will be released at 1800 GMT (2 p.m. ET).

According to Lukman Otunuga, senior research analyst at FXTM, the Fed minutes will be closely analyzed for insight into how policymakers evaluated the need for higher rates despite the banking sector's turmoil.

Silver XAG= increased by 1.2% to $25.39 per ounce, while platinum XPT= and palladium XPD= also rose by 2.4% to $1,018.79 and 1.9% to $1,474.24, respectively. Photo by Andrzej Barabasz (Chepry), Wikimedia commons.