Gold near 3-week peak on dollar slide; U.S. inflation data in focus

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Gold prices steadied on Monday near a three-week peak hit in the previous session, buoyed by a weaker dollar, while investors looked forward to U.S. inflation data later this week that could influence the size of Federal Reserve rate-hike.

Spot gold was little changed at $1,677.04 per ounce by 10:34 a.m. ET (1534 GMT), after rising more than 3% to its highest since Oct. 13 at $1,681.69 on Friday.

U.S. gold futures rose 0.4% to $1,683.20.

"Some weakness in the dollar, yields are ticking down slightly and that's what's helping gold and the whole precious metal complex," said Bob Haberkorn, senior market strategist at RJO Futures.

The dollar extended losses to a more than one-week low, making gold more attractive for other currency holders. [USD/]

Data on Friday showed U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% raised hopes that the U.S. central bank would be less aggressive on rate hikes going forward.

Although gold is seen as an inflation hedge, higher interest rates raise the opportunity cost of holding bullion.

"If they (the Fed) pause or they start to slow down on these rate hikes, gold will benefit and that's what we saw late last week... people getting in ahead of CPI data."

The U.S. consumer price index (CPI) report is due on Thursday. Traders are now pricing in 67% odds of a 50-basis point rate hike at the Fed's meeting in December.

Also on the radar is Tuesday's U.S. midterm elections, which will determine control of Congress and could spur moves all over the market.[MKTS/GLOB]

"Gold prices are holding Friday's strong gains that included a technically bullish weekly high close that is one chart clue that a market bottom is in place," Jim Wycoff, senior analyst at Kitco Metals, said in a note.

Spot silver was steady at $20.84 per ounce, platinum rose 0.9% to $969.63 and palladium increased 0.4% to $1,869.04.