Investing.com - Gold prices rose on Monday, closing in on the psychologically important $1,300 level as the dollar was dented by expectations that the U.S. Federal Reserve would halt its rate-hiking cycle for the year, lifting demand for the metal from holders of other currencies.
"The precious metals complex is fairly well supported given the loose monetary turn coming out of the Fed," ING analyst Warren Patterson said.
Fed Chairman Jerome Powell on Friday said the central bank would be more sensitive to downside risks in the market, adding that it was "prepared to shift the stance of policy" if needed.
Prices of the yellow metal tend to rise when rate hike expectations ease because lower rates reduce the opportunity cost of holding non-yielding bullion.
February gold futures were up 0.59% to $1,293.40 by 09:32 AM ET (14:32 GMT) on the Comex division of the New York Mercantile Exchange after rising as high as $1,296.50 earlier.
The U.S. dollar weakened on growing bets the Fed would pause its rate hike cycle in the coming months after Friday's comments from Chairman Jerome Powell.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.43% to 95.33, the weakest level since Oct. 22.
"We are seeing buyers returning to the (gold) market on dips," said Saxo Bank analyst Ole Hansen, adding that the dollar weakness supported prices.
"The main trend remains bullish (for gold). From a technical point of view, traders are now watching the two key levels of $1,277 and $1,300, which are new support and resistance levels respectively," ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Palladium, used mainly in emissions-reducing auto catalysts for vehicles was up 0.3% to $1,238.15.
"The physical market (for palladium) is so tight we are seeing ETF holdings being withdrawn in order to meet that physical demand from the industrial sector," Patterson added.
Among other precious metals, silver was little changed at $15.79 per ounce, while platinum rose 0.33% to $830, having touched a more than one-month high of $831.10 earlier in the session.
-- Reuters contributed to this report.