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Gold prices eased on Wednesday to a three-month low as an elevated dollar continued to restrain bullion while investors await monthly U.S. inflation data, which could have some impact on the Federal Reserve's monetary policy stance.

Spot gold was down 0.1% at $1,838.26 per ounce, as of 0330 GMT, after hitting its lowest since Feb. 11 earlier in the session. U.S. gold futures dipped 0.2% to $1,836.50.

U.S. consumer price index (CPI) data for April is due at 1230 GMT.

The markets have priced in the current move in real yields ahead of CPI data. Higher real yields have been driving gold lower and supporting the USD despite nominal yields easing, said Stephen Innes, managing partner at SPI Asset Management. [US/]

Analysts expect the CPI data to show a sharp pullback in monthly growth, cooling to 0.2% in April from 1.2% in the prior month, and an annual increase of 8.1%.

The dollar hovered near recent 20-year highs, making greenback-priced bullion less attractive for other currency holders. [USD/]

"The problem for gold investors and other commodities that have been used as an inflation hedge is that the Fed will at all costs raise rates to snuff out the inflation fires," Innes said.

Fed officials on Tuesday fortified their arguments for the swiftest series of interest rate hikes since at least the 1990s to combat inflation, while President Joe Biden urged the U.S. central bank to tame the price increases he said were hurting American households.

Gold is seen as a hedge against inflation and a safe store of value during times of political and economic crises, but is highly sensitive to rising short-term U.S. interest rates, which raise the opportunity cost of holding zero-yield bullion.

Spot silver gained 0.8% to $21.40 per ounce, platinum rose 0.8% to $971.33, and palladium was up 0.1% at$2,067.47.