* Bullion hit its lowest since June 10 on Wednesday

* U.S. dollar down 0.1%

* U.S. PCE data due on Friday

June 27 (Reuters) - Gold prices inched higher on Thursday, with the market spotlight on key U.S. inflation data that could offer cues on the Federal Reserve's next interest rate move.

Spot gold was up 0.3% at $2,303.80 per ounce, as of 0816 GMT, after falling to its lowest level since June 10 on Wednesday.

U.S. gold futures edged 0.1% higher to $2,314.40.

The dollar index weakened 0.1% after hitting a nearly two-month high in the previous session. Softer dollar makes gold more attractive for other currency holders.

"Gold is finding support from a moderating U.S. dollar, with traders also aware that dips below $2,300 since April have so far proven short-lived," said Han Tan, chief market analyst at Exinity Group.

"If the prospects for Federal Reserve rate cuts by end-2024 are further diluted, gold bulls may ultimately relinquish their bid to sustain bullion above the psychological $2,300 level."

Traders are currently pricing in about a 62% chance of a rate cut in September, according to CME FedWatch Tool.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Fed Governor Michelle Bowman reiterated on Wednesday her baseline view that "inflation will decline further with the policy rate held steady."

Data lined up for the week includes U.S. first-quarter gross domestic product estimates, expected at 1230 GMT, and the personal consumption expenditures (PCE) inflation data on Friday.

"Gold prices remain tangled in a tug of war between a less-dovish Fed and high levels of geopolitical tension," analysts at BMI said in a note dated Wednesday.

In the Middle East, cross-border strains between Israel and Lebanon's Hezbollah have been escalating in recent weeks, stoking fears of an all-out Israel-Hezbollah war that could draw in other regional powers.

Spot platinum was down 0.6% at $1,004.60, palladium lost 0.7% to $922.25, while silver gained 0.1% to $28.79.

(Reporting by Daksh Grover in Bengaluru; Editing by Sherry Jacob-Phillips)