Credit: Reuters

Spot gold fell 0.4% to $2,885.53 per ounce by 0504 GMT. Bullion climbed to a record high of $2,942.70 on Tuesday. U.S. gold futures eased 0.8% to $2,910.70.

Powell said on Tuesday the economy is in a good place and the Fed isn't rushing to cut interest rates further, but is prepared to do it if inflation drops or the job market weakens.

Bullion is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset's appeal.

"There is an element of profit-taking on gold following its all-time highs and ahead of the next batch of U.S. inflation data, which shapes as a possible risk event for the precious metal if core CPI happens to produce an upside beat," said Tim Waterer, chief market analyst at KCM Trade.

The U.S. Consumer Price Index (CPI) report is due at 1330 GMT later in the day. The CPI likely rose 0.3% in January, following a 0.4% gain in the prior month, a Reuters poll showed.

Investors are closely watching for the Producer Price Index (PPI) data due on Thursday and Powell is also due to testify before Congress later in the day.

Mexico, Canada and the European Union on Tuesday condemned U.S. President Donald Trump's decision to impose tariffs on all steel and aluminium imports next month, which has fanned fears of a major global trade war as investors brace for more trade duty announcements.

"The bullish trend (in gold) remains intact given the tariff picture uncertainty and the resulting safe-haven flows, which could keep underpinning the precious metal," Waterer said.

Spot silver eased 0.2% to $31.83 per ounce, platinum lost 0.5% to $978.06.

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