Gold prices extended gains on Wednesday, as the dollar dipped after U.S. core inflation data came in softer than expected, abating inflation pressures and rekindling expectations that the Federal Reserve's easing cycle may not be over yet.

Front-month gold futures surged to their largest gain in nearly a month, after U.S. core inflation data came in softer than expected, easing inflation pressures and renewing hopes that the Federal Reserve may implement multiple rate cuts this year after all.

Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

Gold prices firmed near one-month highs hit earlier on Thursday after a softer-than-expected core U.S. inflation print increased chances of two Federal Reserve rate cuts this year, with the first likely in June.

U.S. Consumer Price Index report, due out on Wednesday, is expected to reveal a nudge upward in the headline inflation rate, while the core remained steadfast. With recent remarks from Federal Reserve officials signaling a more cautious and gradual approach to interest-rate cuts on the back of resilient economic data,