Gold futures edged up 0.2% at $1,292.25 on the Comex division of the New York Mercantile Exchange by 1:09 AM ET (06:09 GMT).
The U.S. dollar index that tracks the greenback against a basket of other currencies slipped 0.07% to 95.195.
A weaker dollar can be a positive for commodities priced in the U.S. currency, making them less expensive to buyers holding other currencies. Conversely, a stronger dollar can weigh on prices.
The upcoming data on U.S. producer price inflation, which would be released on Tuesday, is expected to generate some attention. If figures indicate that inflationary pressures are cooling, there could be a further reprieve from concerns over the prospect of additional rate hikes in the coming months, according to analysts.
“The outlook for relative central bank policy has reached its climax in terms of offering the U.S. dollar support, and widening fiscal and current account deficits are expected to deliver medium-term weakness in the currency,” said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
Earlier this month, Federal Reserve Chairman Jerome Powell indicated the central bank would be willing to rein in monetary policy tightening should the need arise.
Powell said that he was aware of economic risks and would be flexible in policy decision this year, easing concerns that the central bank might ignore recent data that suggested an economic slowdown.
Gold is highly sensitive to rising interest rates, as these increase the opportunity cost of holding non-yielding bullion.
A number of Fed officials will be speaking this week, giving them additional opportunities to reassure market watchers that they will take a patient approach towards monetary policy./investing.com