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Gold prices steadied on Wednesday, as investors keenly awaited the U.S. inflation data for hints on the size of the Federal Reserve's potential interest rate cut next week.

Spot gold held its ground at $2,518.22 per ounce by 0319 GMT. U.S. gold futures rose 0.2% to $2,547.10.

"Gold is range-bound in a well-supported market ahead of a key US inflation report," said City Index senior analyst Matt Simpson, adding that data is likely to show soft inflation and send gold to a record high.

The U.S. Consumer Price Index (CPI) data is due at 1230 GMT, while the Producer Price Index reading and initial jobless claims are due on Thursday.

The CPI report is expected to show inflation nearing the Fed's 2% target, supporting Chair Jerome Powell's view that price growth is under-control, and play a pivotal role in determining the size of the rate cut next week.

The Fed will lower interest rates by 25 basis points at each of the three remaining policy meetings in 2024, according to a majority of economists in a Reuters poll.

Zero-yield bullion tends to be a preferred investment amid lower interest rates and geopolitical turmoil.

"I see good support for gold prices around $2,450-$2,460. By year-end, gold should trade around $2,600, driven by Fed policy easing and persistent geopolitical tensions," said Peter Fung, head of dealing at Wing Fung Precious Metals.

Israeli forces are close to fulfilling their mission in Gaza and their focus will turn to the country's northern border with Lebanon as daily exchanges of fire with Hezbollah take place, Defence Minister Yoav Gallant said on Tuesday.

Among other metals, spot silver edged up 0.1% to $28.40 per ounce, platinum gained 0.6% to $943.10 and palladium was up by 0.9% to $973.78.