Gold rises on softer dollar, fading Fed hike expectations

On the geopolitical front, U.S. President Donald Trump's envoys met with Egyptian, Qatari and Turkish mediators in Cairo on Sunday, a diplomatic source said, aiming to advance his Gaza peace plan, though Israel continued airstrikes.

Among other metals, spot silver XAG= rose 1.5% to $65.61 per ounce. Platinum XPT= gained 0.7% to $1,759.72 per ounce while palladium XPD= climbed 1.6% to $1,333.25 per ounce.

"Softer inflation, employment and consumer data are reducing the risk of another rate hike, strengthening the case that the Fed's next meaningful move may ultimately be a cut," said Ole Hansen, head of commodity strategy at Saxo Bank.

"The dollar is showing signs of rolling over after its recent strength, removing another important headwind for bullion."

An unexpected drop in U.S. payrolls and tame consumer price inflation data reduced expectations of the Federal Reserve increasing interest rates next month.

"U.S. gasoline prices remain above $4/gallon, keeping some pressure on inflation data in the next report," said UBS analyst Giovanni Staunovo.

Markets are now pricing in a 31% chance of a September rate hike, down from 51% a month earlier, CME's FedWatch Tool showed. FEDWATCH

Lower interest rates tend to support gold, which does not pay interest.

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

Gold prices rose on Monday as a weaker dollar and fading expectations of a U.S. Federal Reserve rate hike next month supported bullion.