By Matt Whittaker 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)--Gold futures are slightly higher Wednesday morning after the Federal Reserve left interest rates at record lows and as U.S. price data cause some to believe the central bank will remain accommodative for longer.

In recent trading, most-active April gold was up $2.20, or 0.2%, at $1,124.70 an ounce on the Comex division of the New York Mercantile Exchange. At 8:25 a.m. EDT, the last trade for thinly traded nearby March gold had the contract up $3.10, or 0.3%, at $1,125.30.

After gold closed markedly higher on Tuesday, the Federal Reserve announced it would leave the fed funds rate unchanged at a range of 0.0% To 0.25%.

The low rate climate is positive for gold, said MF Global analyst Tom Pawlicki.

Such policy has encouraged investment in gold as a risk play against the perceived safety, but lower returns, of the U.S. dollar. Also, as the low rates weigh on the dollar, that supports gold because a weaker greenback makes the dollar-denominated metal less expensive for purchasers using other currencies, boosting demand.

The ICE Futures U.S dollar index was recently down 0.005 point, or 0.006%, at 79.748 points after a softer-than-expected reading on U.S. producer prices.

The producer price index for finished goods dropped by a seasonally adjusted 0.6% on the month in February, the Labor Department said Wednesday. Economists were expecting more moderate drop of 0.3%.

Although gold is often seen as an inflation hedge--and so ostensibly would be pressured by readings of lower inflation--the softer data gives the Federal Reserve room to keep interest rates at record lows to continue fueling the economic recovery.

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com