The dollar is edging lower, as investors consolidate their bets before key U.S. inflation data later this week that may reverse the currency's weakness this year. Typically, a weaker greenback supports commodities such as gold, which are priced in U.S. dollar, lowering the cost for overseas buyers. Gold shed close to 1.00% on Friday after better than expected U.S. employment data increased the likelihood of a December rate hike from the Federal Reserve.
Any tightening in monetary policy decreases the relative demand for gold. Bullion prices were last seen around $1259.50 an ounce. $1250 represents the immediate downside support from where the metal rebounded yesterday. An hourly close above $1261 could see gold mount a climb back to levels of $1270 an ounce.