Gold prices trimmed losses on Wednesday after U.S. producer prices unexpectedly fell in June, although worries about inflation and elevated interest rates remained due to escalating tensions in the Middle East.

Spot gold was down 0.2% at $4,047.27 an ounce after falling nearly 1% earlier in the session. U.S. gold futures fell 0.4% to $4,053.70. The metal had climbed more than 2% in the previous session.

Traders weighed softer-than-expected inflation data against escalating attacks in the Middle East for clues to the Federal Reserve's interest-rate path. Rising oil prices fueled inflation concerns and uncertainty over the U.S. interest-rate outlook, weighing on non-yielding bullion.