Gold eased on Monday as a slight rise in the U.S. dollar dented safe-haven demand amid trade war concerns, while investors awaited inflation data this week for clues on the Federal Reserve's next interest rate decision.

Spot gold fell 0.2% to $2,905.05 an ounce by 1201 GMT, while U.S. gold futures were steady at $2,911.60.

The dollar index (.DXY), opens a new tab , pared losses slightly after hitting a more than four-month low on Friday. Quantitative Commodity Research analyst Peter Fertig said the dollar's ​​strength was weighing on bullion and he expects further correction below $2,900.

Meanwhile, the focus remains on trade tensions. In his latest warning to Canada, U.S. President Donald Trump said Friday that tit-for-tat tariffs on dairy products and lumber could be imminent. "Gold prices are likely to remain supported around the $2,900 level, with a possible return to the all-time high of $2,956 reached in late February," said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.

Traders are awaiting US Consumer Price Index (CPI) data on Wednesday and Producer Price Index (PPI) on Thursday for cues on US interest rates.

The Fed has kept interest rates steady after cutting three times in 2024. Market prices reflect expectations for the first cut this year in June.

Bullion is seen as a hedge against inflation and geopolitical uncertainty, but higher interest rates can reduce the appeal of the non-yielding asset.

Data showed China's consumer price index, the top consumer of the metal, missed expectations in February and fell at the sharpest pace in 13 months, while producer price deflation persisted. Spot silver was unchanged at $32.55 an ounce, platinum rose 0.6% to $968.40, and palladium rose 0.2% to $950.50. (Newsmaker23)

Source: Reuters