Gold traded in a narrow price range on Wednesday as investors looked forward to a key U.S. inflation reading that could shed more light on the Federal Reserve's interest rates trajectory.

Spot gold rose 0.2% to $2,367.79 per ounce by 0229 GMT. U.S. gold futures climbed 0.3% to $2,374.10.

Fed Chair Jerome Powell in his testimony to the Senate said inflation had been improving in recent months and that "more good data would strengthen" the case for looser monetary policy. Powell will next speak before the House later in the day.

"With the recent run of weaker U.S. data, the case has been built around a September rate cut, but with the Fed Chair still wanting to see more good data, further inflation progress will be needed to offer more confidence for policymakers to open the door to rate cuts," said IG market strategist Yeap Jun Rong.

Traders currently see a 73% chance of a rate cut in September, according to the CME Group's FedWatch Tool. Non-yielding bullion's appeal tends to shine when interest rates are lower.

The June consumer price index (CPI) data, due on Thursday, is expected to show that headline prices rose 0.1% on the month, while core prices gained 0.2%. That would put annual gains at 3.1% and 3.4%, respectively.

"Any surprise resurgence in pricing pressures may challenge the Fed's inflation fight, which could raise calls for a delayed policy easing process. That may weigh on gold, which could see prices fall back towards the $2,300 level of support," Yeap said.

Global physically backed gold exchange traded funds saw the second consecutive month of inflows in June due to additions to holdings by Europe- and Asia-listed funds, the World Gold Council said on Tuesday.

Spot silver rose 0.3% to $30.89 per ounce, platinum steadied at $984.55 and palladium gained 0.1% to $981.37. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)