By Brijesh Patel
Dec 20 (Reuters) - Gold prices edged up and held above the key $2,000 level on Wednesday, supported by prospects of interest rate cuts from the Federal Reserve next year, while investors awaited U.S. inflation numbers due later this week.
Spot gold XAU= rose 0.1% to $2,042.10 per ounce, as of 0729 GMT. U.S. gold futures GCcv1 gained 0.2% at $2,055.90.
Last week, the Fed indicated its tightening phase was at an end and signalled that rate cuts are in the cards for 2024.
Atlanta Fed President Raphael Bostic on Tuesday said there is no current "urgency" for the central bank to reduce U.S. interest rates given the strength of the economy.
"The Fed are pushing back on rate cuts, and unless we see a materially weaker PCE inflation report then there could be some room for disappointment from those calling for a March cut, and limit gold's upside potential," said Matt Simpson, a senior analyst at City Index.
Markets are pricing in about a 75% chance of a rate cut in March, according to CME FedWatch tool. Lower U.S. interest rates pressure the dollar and bond yields, increasing the appeal of non-yielding bullion. US/USD/
Investors now await the November core personal consumption expenditure (PCE) index report, the Fed's preferred measure of underlying inflation, due on Friday.
Further progress on beating back inflation will be the decisive factor in any Fed decision next year to reduce interest rates, Chicago Fed Bank President Austan Goolsbee said.
Spot silver XAG= climbed 0.2% to $24.08 per ounce, while platinum XPT= added 0.2% to $955.87. Palladium XPD= fell 0.4% to $1,218.96.
Spot gold price in USD per oz https://tmsnrt.rs/3NxMEti
(Reporting by Brijesh Patel and Tina Parate in Bengaluru; Editing by Rashmi Aich and Janane Venkatraman)