Gold prices hovered on Wednesday near their highest level in more than a month, supported by a weaker dollar with investors awaiting U.S. inflation data, which is expected to influence the pace of Federal Reserve rate hikes.

Spot gold held its ground at $1,793.39 per ounce, as of 0318 GMT, after hitting its highest since July 5 at $1,800.29 on Tuesday.

U.S. gold futures were down 0.1% at $1,810.

The dollar index weakened 0.1% against its rivals, making gold less expensive for other currency holders.

"Clearly the focus is on U.S. inflation data. Also, what's really important is that where prices are currently trading with $1,800 being the very important level here," said Ilya Spivak, a currency strategist at DailyFX.

"If inflation number come in stronger than expected, following last week's solid jobs report, we could see some of rate cut expectations for next year leave the forecast, which would be gold negative."

Economists polled by Reuters expect U.S. annual inflation to have eased to 8.7% last month from 9.1% in June.

Core inflation is expected at 0.5% month-on-month . The data is due at 1230 GMT. The Fed hiked rates by 75 basis points each in June and July to rein in soaring inflation.

Although gold is seen as a hedge against inflation, higher U.S. interest rates dull non-yielding bullion's appeal.

Fed funds futures traders are now pricing for a 67.5% chance of another 75-basis-point rate increase at the U.S. central bank's next policy meeting in September.

"Central banks have warned that further rate hikes will be required to tame persistently high inflation. Investors expect July's consumer price index to cool a bit," ANZ analysts said in a note.

"However, strong wage growth and higher labour costs could undermine this."

Spot silver eased 0.2% to $20.47 per ounce, platinum fell 0.4% to $930.14, and palladium edged 0.1% higher to $2,217.40.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)