Updated from 12:10 p.m. EST

Gold prices edged higher Wednesday as the dollar declined against other major currencies.

Prices for bullion to be delivered in February added $7.40 close at $633.30 an ounce on the Comex division of the Nymex.

The exchange-traded funds that hold inventories of gold bars also were moving ahead. iShares Comex Gold Trust ( IAU) was up 0.8%, while streetTracks Gold Shares ( GLD) was higher by 1.1% in recent action.

Surprisingly strong producer price index data for December combined with higher-than-expected industrial production in the same month helped the dollar pare some of its losses, but it still remained underwater compared with a day earlier.

Dollars were recently changing hands for 120.61 yen, down slightly from 120.63 yen late Tuesday. The euro was trading at $1.293, up from $1.291 previously. Prices for gold tend to move in the opposite direction to that of the greenback.

"The more economic data we get the clearer it is that the Federal Reserve won't be making interest rate cuts any time soon," says Michael Darda, chief economist at MKM Partners in Greenwich, Conn.

Short-term traders often choose currencies based on the relative returns from investing in government securities. Hence, the prospect of the Fed not reducing rates would have a buoying effect on the greenback, because yields on U.S. Treasuries won't be expected to come down.

But longer term, other factors can have hefty influences on currency. For instance, new data show that U.S. investors purchased record levels of foreign stocks and bonds last November.

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