Gold nudged higher on Tuesday as investors weighed mixed signals on potential U.S.-Iran talks and awaited a series of U.S. labour market reports for clues on the Federal Reserve's interest rate trajectory.
Spot gold rose 0.2% to $4,061.96 per ounce by 0650 GMT. U.S. gold futures rose 0.7% to $4,118.30.
Reports on U.S. labour market due this week include job opening data later in the day, the ADP employment report on Wednesday and nonfarm payrolls figures on Friday.
"Gold is currently in a consolidation phase. If we see weakness in the job market, it could pressure the U.S. dollar and as result there will be gains in gold," said Ajay Kedia, director at Mumbai-based Kedia Commodities.
U.S. President Donald Trump said talks with Iran were under way, warning of a "last chance" for Tehran to sign a good deal, but Iran denied that negotiations were being held or planned.
The conflict has driven up energy costs and stoked inflation fears, which could prompt central banks to raise interest rates to keep price pressures in check.
While gold is seen as an inflation hedge, higher rates tend to weigh on the metal as it yields no interest.
Traders currently price in a 65% chance of a rate hike in September after a divided Fed maintained the status quo at its last policy meeting.
If bets for a September rate-hike ease, it will support gold prices, Kedia said.
Federal Reserve Bank of New York President John Williams said he remained optimistic that inflation pressures are on track to ease gradually, but if they don't, the U.S. central bank will not hesitate to respond with rate hikes.
Citi said in a note that it expects gold prices to stagnate or even decline over the next month, before rallying to $4,500 in the fourth quarter and to $5,000 by the first half of next year.
Spot silver gained 1.2% to $58.88 per ounce, platinum firmed 1.3% to $1,648.97 and palladium rose 1.1% to $1,278.38. - Reuters
