(Bloomberg) -- Gold held gains, with investors turning their focus to upcoming US inflation data that will influence the Federal Reserve as it mulls when to pause its monetary tightening cycle.

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The precious metal has risen almost 1% this week following its 1.4% increase last week, to put it within reach of a record high. Core consumer price index figures due Wednesday are expected to show headline inflation in the US rose by 5% in April on a year-on-year basis, a level likely to be still uncomfortably high for the Fed.

Options traders are now betting on further rate hikes into the next couple of central bank policy meetings in June and July. While higher rates are generally negative for non-interest-bearing bullion, gold could be entering a “win-win scenario,” according to Oanda senior market analyst Ed Moya.

“A hot inflation report will justify higher rates for longer that will cripple growth prospects and trigger a stock market selloff,” potentially boosting short-term haven demand for bullion, Moya said in a note. “A cooling round of inflation data points could vindicate calls that the Fed is done tightening and support Fed rate cuts to happen later in the year.”

Meanwhile, a looming US debt ceiling crisis is further deteriorating investor sentiment. A failure to find a resolution presents a genuine risk to the standing of the dollar, boosting the appeal of bullion.

Spot gold was steady at $2,035.12 an ounce as of 9:28 a.m. in Singapore. The Bloomberg Dollar Spot Index edged down. Silver was little changed, while platinum and palladium gained.

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