Spot gold was down 0.2% at $3,633.97 per ounce

Gold prices dropped on Thursday, hovering near record highs, as investors awaited U.S. consumer inflation data due later in the day following weaker-than-expected producer price figures that reinforced expectations of a rate cut by the country’s central bank next week.

Spot gold was down 0.2% at $3,633.97 per ounce, as of 0411 GMT. Bullion reached a record high of $3,673.95 on Tuesday.

Gold seems to be consolidating recent gains as markets wait for U.S. Consumer Price Index data and what it’ll mean for Fed (U.S. central bank) rate cut expectations, said Ilya Spivak, head of global macro at Tastylive.

U.S. producer prices unexpectedly dropped in August due to lower trade services margins and modest increases in goods costs.

Investors are now focused on U.S. CPI data, due at 1230 GMT. CPI is expected to have increased 2.9% year-on-year, compared with 2.7% in July.

Weaker-than-expected nonfarm payroll data last week, along with revised estimates revealing 911,000 fewer jobs in the 12 months through March, have reinforced expectations of monetary easing. Weekly jobless claims data, also due at 1230 GMT, will offer further insights into the labor market.

The trend points higher, but a hot CPI report may boost the dollar, hurt gold prices in the short term, forcing a pullback. Losses may be limited however as markets are unlikely to abandon rate cut bets even if they push them further out along the timeline, Spivak said.

The central bank is widely anticipated to lower interest rates by 25 basis points at its meeting next Wednesday, while investors also priced in a slim possibility of 50-basis-point cut, as per CME FedWatch tool.

Lower interest rates typically support non-yielding gold.