Spot gold rose 0.9% to $1,744.75 per ounce by 9:28 a.m. EDT (1338 GMT), recovering some ground after four straight sessions of declines. U.S. gold futures gained 0.8% to $1,745.90.
The bullion has been held back by concerns over tapering, keeping it below the key $1,800 mark, especially after a strong U.S. jobs report last week.
But Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said Wednesday's U.S. inflation data helped ease those concerns, buoying gold.
"An inflation number that's in line leaves the Fed scratching their heads and has them more on a wait-and-see-and-interpret-more-data type of approach."
"The gold market is not going back up till $1,835, but I don't think the bottom is going to fall out yet," he added.
The U.S. consumer price index increased 0.5% last month after climbing 0.9% in June. That was in line with forecasts made by economists in a Reuters poll.
Providing a further boost to gold, the dollar fell from a more than four-month high and U.S. Treasury yields too weakened, largely on the back of the data. [USD/] [US/]
Lower yields reduce the opportunity cost of holding non-interest bearing gold.
Elsewhere, platinum gained 1.7% to $1,011.87 per ounce, while palladium fell 0.3% to $2,633.22.
Commerzbank analysts said palladium's demand could take a further hit if private-sector data, which showed China's vehicle sales slid for a third straight month in July, were reaffirmed by official figures.
Platinum and palladium are used as catalysts in automobile exhaust systems to curb emissions.
Silver rose 0.7% to $23.49 an ounce.
(Reporting by Nakul Iyer in Bengaluru; Editing by Anil D'Silva)
By Nakul Iyer
