Gold gained on Thursday as the U.S. dollar weakened due to concerns over the U.S. Federal Reserve’s future independence while market focus shifted to upcoming U.S. inflation data for clues on the interest rate outlook.

Spot gold rose 0.5% at $3,347.39 per ounce, as of 0851 GMT. U.S. gold futures firmed 0.5% to $3,360.90.

The U.S. dollar fell, making dollar-denominated gold more attractive to holders of other currencies.

U.S. President Donald Trump on Wednesday called Federal Reserve Chair Jerome Powell "terrible" and said he has three or four people in mind as contenders for the top Fed job.

Powell said the risk that Trump’s tariff plans could lead to more persistent inflation is significant enough for the Fed to proceed cautiously with further rate cuts.

"Spot gold is set to adhere to the $3,000-$3,500 range, barring greater certainty over the timing of the Fed’s next rate cut," said Han Tan, chief market analyst at Nemo.Money.

U.S. GDP data is due later on Thursday and the Personal Consumption Expenditures (PCE) report on Friday.

"A surprise cooling in the Fed’s preferred inflation gauge may see spot gold break above its 21-day moving average to move closer to the psychological $3,400 level once more," Tan said.

Gold is viewed as a hedge against inflation and economic uncertainty, but its appeal diminishes in a high interest rate environment, as it offers no yield.

Palladium rose 4.3% to $1,103.70, the highest level since late-2024. Platinum firmed 3.5% to $1,402.57, the highest since 2014.

Internal combustion vehicles are likely to remain relevant for longer as governments delay phase-out targets, and biofuel adoption continues to rely on platinum group metals, said Nitesh Shah, commodities strategist at WisdomTree.

With limited new supply and geopolitical constraints, supply is likely to remain tight, Shah said.

Spot silver climbed 0.5% to $36.49.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rachna Uppal)