The latest inflation report slashed the risk that the Fed could go back to hiking interest rates this year, Wall Street strategists say.

Gold prices edged lower on Wednesday as caution prevailed ahead of the U.S. consumer price inflation report that could provide more clarity on the Federal Reserve's interest rate trajectory. Spot gold eased 0.

U.S. inflation accelerated last month as prices for gas, eggs, and used cars rose, yet underlying price pressures also showed signs of easing, bolstering hopes that the Federal Reserve could still cut its key interest rate this year.

The Labor Department released the inflation report for December, which showed prices were up 2.9% from a year ago, in line with economists expectations and up from 2.7% in November.