Spot gold was 0.1% higher at $2,330.70 per ounce after a 1% drop in the earlier session, and U.S. gold futures added 0.1% to $2,350.30

Gold prices inched up on Wednesday, helped by weakness in the U.S. dollar and Treasury yields, as market participants waited for more economic data to gauge the Fed’s next step on monetary policy.

Spot gold was 0.1% higher at $2,330.70 per ounce, as of 0736 GMT, after a 1% drop in the earlier session. U.S. gold futures added 0.1% to $2,350.30.

The dollar rose after reaching a near two-month low in the last session, while benchmark 10-year Treasury yields hovered near their lowest level in around three weeks, making bullion more attractive to investors.

The key event is the ISM services report. The ideal scenario for gold bulls is to see the ISM services remain just below 50, with the prices paid component expanding at a slower pace – as this satisfies the ‘soft landing’ scenario the Fed are aiming for, according to City Index senior analyst Matt Simpson.

The U.S. ISM services data is due at 1400 GMT. Markets are also awaiting the ADP employment report due at 1215 GMT on Wednesday and the NFP data on Friday for further hints about the health of the U.S. economy.

An upside print in the NFP could see the expected timeline for the first rate cut shift back in favour of November, while a downside miss could see September firm as the favoured month for potential action from the Fed, Tim Waterer, chief market analyst at KCM Trade, said in a note.

Higher interest rates increase the opportunity cost of holding the non-yielding asset.

Net purchases of gold by global central banks increased in April, the World Gold Council (WGC) said, hinting continuing strong appetite from the sector despite high prices for the metal.