Gold prices edged lower on Wednesday, weighed down by a stronger dollar, as investors awaited key U.S. inflation data and the Federal Reserve's updated interest rate projections due later in the day.



* Spot gold was down 0.2% at $2,311.80 per ounce, as of 0128 GMT. U.S. gold futures rose 0.1% to $2,328.80.

* The dollar was up 0.1%, making the greenback-priced bullion less attractive for other currency holders, while the benchmark U.S. 10-year bond yield also rose. .

* The May consumer price index (CPI) inflation report, due at 1230 GMT, will be the next major data point to drive Fed expectations.

* Fed policymakers will update their economic and interest rate projections when they conclude their two-day meeting later in the day.

* Updated economic projections from Fed officials this week are expected to show fewer interest rate cuts than policymakers anticipated three months ago.

* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

* Demand for gold in Asia is surging despite prices hovering near the record highs it hit in May, industry officials say, as buyers snap up the metal to hedge against geopolitical and economic uncertainty.

* Gold producer Polymetal International plans to double output by 2029 through acquisitions in Central Asia and will halt dividends while pursuing that goal, it said on Tuesday in a strategy shift since the sale of its Russian assets.

* Spot silver rose 0.2% to $29.33 per ounce, platinum was up 0.8% at $959.10 and palladium gained 1% to $892.45.

DATA/EVENTS (GMT) 0130 China PPI, CPI YY May 0600 Germany HICP Final YY May 0600 UK GDP Est 3M/3M April 0600 UK GDP Estimate MM, YY April 0600 UK Services MM, YY April 0600 UK Manufacturing Output MM April 1230 US Core CPI MM, SA; YY, NSA May 1230 US CPI MM, SA; YY, NSA May 1230 US CPI Wage Earner May 1800 US Federal Open Market Committee announces its decision on interest rates followed by statement (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Eileen Soreng)