Gold surged above the key $3,800-per-ounce level for the first time ever on Monday, supported by a weaker dollar and growing expectations that the Federal Reserve will cut interest rates further this year.

Spot gold jumped 1.1% to $3,801.88 per ounce by 0435 GMT. U.S. gold futures for December delivery rose 0.6% to $3,831.90.

The U.S. dollar index, opens new tab eased 0.2% against its rivals, making greenback-priced bullion less expensive for overseas buyers.

The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.3% in August, versus a 0.2% increase in July, matching the estimate of economists polled by Reuters.

"That benign inflation print in the United States has given the markets reason to believe further Fed cuts are coming in October and December," said Capital.com analyst Kyle Rodda.

"Sentiment is very bullish and we are on track to retest another record high this week. The gold market is positioned quite long at the moment and that may be pointed to as being a reason to be cautious about future upside."

Traders are currently pricing in a 90% chance of a Fed rate cut in October, with around a 65% probability of another easing in December, according to the CME FedWatch Tool.

Safe-haven bullion thrives in a low interest rate environment and in times of geopolitical and economic uncertainty.

Share markets got off to a cautious start in Asia on Monday as investors braced for a possible shutdown of the U.S. government.

Investors now await U.S. data on job openings, private payrolls, the ISM manufacturing PMI and the non-farm payrolls report for further clues on the economy's health.

SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings rose 0.89% to 1,005.72 metric tons on Friday from 996.85 tons on Thursday.

Elsewhere, spot silver rose 2.4% to $47.08 per ounce, platinum climbed 3.4% to $1,622.04 and palladium gained 2.2% to $1,297.67.

Source: Reuters