Spot gold was down 1 percent at $1,296.51 per ounce as of 2:29 p.m. EDT (1829 GMT), retreating from $1,311.07 reached on Wednesday, its highest since March 1.
Silver advanced 0.3 percent to $15.37 per ounce, after touching its highest since March 1 earlier in the session. "The US PPI numbers came weaker-than-expected. This, coupled with the Brexit news, is helping gold", said Bob Haberkorn, senior market strategist at RJO Futures.
Meanwhile, US consumer prices rose for the first time in four months in February, but the pace of the increase was modest, resulting in the smallest annual gain in almost 2-1/2 years, supporting the Federal Reserve's "patient" stance on USA interest rate hikes.
The dollar fell from near three-month highs hit in the previous session, making bullion cheaper for holders of other currencies, while sterling soared. The US central bank's rate-setting committee will issue its next policy statement following its March 19-20 meeting. "Traders are buying into the fact that they are expecting a very dovish US Fed announcement", Haberkorn said. "Metals technically have more upside to go just on rising geopolitical uncertainty, specifically what's going on in Britain", Haberkorn added.
British lawmakers on Wednesday rejected leaving the European Union without a deal and paved the way for a vote that could delay Brexit until at least the end of June.
Asian shares rose after the European Commission agreed to changes to the Brexit deal ahead of a vote in the British parliament on a divorce agreement. On the technical front, "gold is now heading towards the next potential resistance around $1313, a former support level", said Forex.com analyst Fawad Razaqzada.
"It is a combination of factors that have weighed on gold; weak Chinese data that is weighing on industrial demand for the metal, risk-on sentiment, rebounding yields, a higher dollar and stronger United Kingdom stocks", said Forex.com analyst Fawad Razaqzada.
Reflecting investors sentiment, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose about 0.4 percent on Tuesday.
Among other precious metals, palladium was up 0.3 per cent at $US1,540.01 per ounce, while platinum gained 1.2 per cent to $US834.55. The pound soared after the vote and was last trading up 0.14 percent to $1.3091.