Gold edges up as soft dollar, weak data dim rate-hike bets

Gold prices edged higher in early Asian trading on Monday, buoyed by a softer dollar and a run of economic data that has tempered expectations of a US interest rate hike next month.

Spot gold was up 0.3% at $4,388.62 per ounce, while US gold futures for December delivery rose 0.2% to $4,444.30. The dollar index slipped 0.1%, making greenback-priced bullion cheaper for holders of other currencies.

A surprise decline in US nonfarm payrolls for July, along with last week's data showing only mild consumer price inflation, has reduced the likelihood of the Federal Reserve tightening policy in September. Markets now price in a 33% chance of a rate hike next month, down from 47% a month ago, according to CME's FedWatch Tool.

Gold, which yields no interest, tends to perform well in a low-rate environment. The metal posted a weekly gain on Friday. Investors will now look to the Fed's July meeting minutes, due on Wednesday, for further clarity on the monetary policy outlook.

On the geopolitical front, US envoys met with Egyptian, Qatari, and Turkish mediators in Cairo on Sunday to advance a Gaza peace plan, even as Israel continued airstrikes in the enclave.

In physical markets, gold discounts in India widened last week to their highest levels in over two months as a rally in prices curbed consumption. Interest in China remained muted despite continued purchases by the central bank.

Among other precious metals, spot silver rose 0.8% to $65.19 per ounce, platinum gained 0.4% to $1,755.40, and palladium added 1.2% to $1,329.00.