Gold climbs on weaker dollar, easing Fed rate hike concerns

Among other metals, spot silver rose 2.1% to $66.01 per ounce. Platinum gained 1.3% to $1,770.3 per ounce while palladium climbed 1.1% to $1,326.92 per ounce.

Gold prices rose on Monday, supported by a weaker dollar and fading expectations of a U.S. Federal Reserve rate hike, while investors continued to monitor geopolitical tensions in the Middle East.

Spot gold was up 0.9% to $4,417.24 per ounce by 1:34 p.m. EDT (1734 GMT). U.S. gold futures for December delivery settled 0.8% higher at $4,473.70.

The gold market appears to be pricing in a stagflationary environment, with softer employment and expectations that the Fed will tolerate current inflation levels, said Bart Melek, global head of commodity strategy at TD Securities.

"A big factor here is the US dollar has weakened to a psychologically important 100 level."

The dollar fell to its lowest level in more than two months, making gold cheaper for buyers holding other currencies.

Markets pared bets on a Federal Reserve rate hike after last week's weaker-than-expected U.S. payrolls report and subdued consumer inflation data.

Investors are now awaiting minutes from the Fed's July meeting, due on Wednesday, for clues on the central bank's policy outlook.

Traders see a 33% probability of a September rate increase, down from 51.2% a month earlier, CME's FedWatch Tool showed.

Gold, which pays no interest, tends to benefit from lower interest rates as they reduce the opportunity cost of holding bullion.