Gold prices edged higher on Wednesday as the dollar slipped and expectations of US interest rate hikes next year dimmed, brightening the appeal of non-interest yielding bullion.

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Spot gold was up 0.2 percent at $1,245.05 per ounce as of 12:26 p.m. EST (1726 GMT). US gold futures were 0.2 percent higher at $1,250.20 per ounce.

The dollar was weaker against a basket of currencies after data showed US consumer prices were unchanged in November, supporting the view that underlying inflation remained firm, but not enough to push the Federal Reserve to take a more aggressive stance.

"We are seeing a bit of support from a weaker dollar across the commodities complex. In addition to that, we are seeing an ongoing outflow of funds from equities and that money flow into alternative assets continues to support the precious metals complex," said David Meger, director of metals trading at High Ridge Futures.

Investors kept an eye out for developments around U.S.-China trade talks, and on Brexit after lawmakers in British Prime Minister Theresa May's Conservatives gathered enough support to trigger a no-confidence vote in her leadership on Wednesday.

"The safe-haven assets continue to be well supported in this environment and that along with some recent comments from the Fed on changing their potential path on interest rates has also been supportive," Meger said.

Markets are not expecting more than one rate hike from the US central bank next year, after a likely interest rate increase at the Federal Open Market Committee (FOMC) meeting on Dec. 18-19.

"Next week's FOMC meeting is going to be the last major economic event of the year. The (gold) market has started to price in the 'one and done' interest rate scenario, and has responded quite positively to that," Saxo Bank analyst Ole Hansen said.

Dollar-denominated bullion earlier this week touched its highest level in five months at $1,250.55 per ounce as chances of slower interest rate hikes reduced the opportunity cost of holding the yellow metal.

Gold is likely to further consolidate below the 200-day moving average, currently around $1,255, Commerzbank analysts said in a weekly note.

Indicative of investor interest in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to the highest level since late August on Tuesday.

Meanwhile, spot palladium was trading at a premium to gold, with prices of the autocatalyst metal rising about 0.7 percent to $1,252.49 an ounce. Palladium has climbed about 18 percent so far this year.

Spot silver rose 1.5 percent to $14.75 per ounce, having earlier hit its highest price since Nov. 2, at $14.77.

Platinum jumped 2.6 percent to $801.80 per ounce