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Gold prices advanced to a near one-month high on Thursday supported by a softer U.S. dollar, after U.S. inflation data raised hopes that the Federal Reserve would soon stop tightening its monetary policy.

Spot gold was up 0.1% to $1,959.79 per ounce by 0241 GMT, hitting its highest since June 16. U.S. gold futures ticked up 0.1% to $1,964.30.

U.S. consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside, but probably not fast enough to discourage the Fed from resuming raising interest rates later this month.

Therefore, a lot of focus remains on the central bank's next rate-setting meeting, which could dictate near-term gold prices, said Brian Lan of Singapore dealer GoldSilver Central.

Recent hawkish comments from policymakers have weighed on gold, with bullion down more than $100 since its May highs.

Higher interest rates increase the opportunity cost of holding non-yielding bullion, even as it is seen as a safe investment during times of political and financial uncertainties.

"(Therefore,) while gold could go higher closer to the $2,000 mark, chances of prices coming down is more likely this quarter, and thus $1,800 remains a possibility," Lan further said, adding the Fed could still strike a "cautious tone".

In the broader financial market, Asian shares and bonds also rallied after U.S. inflation stoked speculation the end of the post-pandemic tightening cycle is in sight.

On investor radar now are U.S. initial jobless claims and the Producer Price Index report, due later in the day.

Among other precious metals, spot silver rose 0.3% to $24.2163 per ounce and palladium advanced 0.7% to $1,292.19.

Platinum gained 0.8% to $954.26, after rising 3% in the previous session.