(Reuters) - Gold prices hovered near a two-month high on Monday, as investors held onto the view that central banks would keep interest rates low for the time being, with focus turning to key U.S. inflation data due later in the week.
Spot gold was flat at $1,816.96 per ounce by 0819 GMT, after hitting its highest since Sept. 7 at $1,821.26 earlier. U.S. gold futures gained 0.1% to $1,818.40.
Major central banks last week stuck to the view that current inflationary pressures would fade, dimming the prospect for faster rate hikes.
Analysts said a better-than-expected U.S. payrolls report on Friday was also unlikely to change the Fed's dovish stance, with market participants now focusing on Wednesday's key Consumer Price Index reading.
"Inflation data will have to be markedly above expectation for any sort of jolt back into the fear of higher interest rates, but as long as it comes out in line with or slightly above expectations, I don't think anybody will panic," IG Markets analyst Kyle Rodda said.
Rodda said a break above $1,830 could drive a rally towards $1,900 in gold, though it would likely trend lower in the long term, as central banks eventually tighten policies to control high inflation.
Accommodative monetary policy amid the COVID-19 outbreak has benefited gold, as near-zero interest rates cut the opportunity cost of holding non-yielding assets.
Platinum gained 0.5% to $1,040.06 and palladium climbed 1% to $2,054.65.
"Although vehicle production is set to rise, the chip shortage is also expected to continue to limit light-vehicle production and palladium demand. That could keep the market in surplus and the price under pressure," Analysts at trading firm Heraeus said in a note.
Palladium and platinum are used to curb harmful emissions in vehicle exhaust systems.
Spot silver was flat at $24.18 per ounce.
(Reporting by Nakul Iyer in Bengaluru; Editing by Ramakrishnan M.)