Gold prices held above the key psychological level of $1,800 as the dollar and bond yields came under pressure after a tamer-than-expected rise in U.S. inflation led to uncertainty on when the U.S. central bank will begin tapering its asset purchases.

Spot gold was steady at $1,802.86 per ounce, as of 0120 GMT on Wednesday, having hit a one-week peak of $1,808.50 in the previous session.

U.S. gold futures eased 0.2% to $1,803.80.

Consumer Price Index (CPI) was up just 0.1% last month, compared with an expected increase of 0.3%. That was the smallest gain in six months suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.

The data has thrown a shade of uncertainty over the Federal Reserve's taper timeline. The Fed will hold a two-day monetary policy meeting next week.

The CPI data weighed on the dollar index, while the benchmark U.S. 10-year yield hit its lowest reading since Aug. 24.

Lower yields reduce the opportunity cost of holding the non-interest bearing bullion.

Japanese manufacturers' confidence worsened to a five-month low in September as the fallout from the latest wave of Covid-19 put fresh pressure on the world's third-largest economy, the Reuters Tankan poll showed.

Silver fell 0.1% to $23.81 per ounce.

Platinum hit an over nine-month low of $930.85 and was last down 0.4% to $935.60.

Palladium was flat at $1,979.16. Prices touched their lowest level since July 2020 at $1,935 in the previous session.