By Ira Iosebashvili 

Gold prices rose Wednesday, as investors reacted to weaker-than-expected inflation data ahead of a Federal Reserve statement later in the session.

Gold for February delivery was recently up 0.3% at $1,245.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Underlying inflation pressures gave signs of moderating last month, a Labor Department report showed Wednesday. Core prices rose 0.1%, a slowdown from the previous month's 0.2% increase. Economists surveyed by The Wall Street Journal had expected core prices to rise 0.2% on the month.

Weaker inflation data undercuts the case for the Federal Reserve to raise rates more aggressively next year. Expectations of a more dovish Fed tend to boost gold, which struggles to compete with yield-bearing investments when rates rise.

With many expecting the Fed to raise interest rates at the conclusion of its meeting this afternoon, investors will likely focus on the central bank's economic and rates projections for 2018.

Some market participants may be unwinding their bets on a lower gold price ahead of the statement, in case the central bank's message is less hawkish than expected, wrote George Gero, managing director at RBC Wealth Management, in a note to clients.

In base metals, copper for March delivery was recently up 0.8% at $3.0455 a pound.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

December 13, 2017 11:37 ET (16:37 GMT)

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