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Gold prices held steady on Monday, buoyed by a softer dollar, as investors awaited for more cues on the U.S. Federal Reserve's monetary policy tightening amid signs of cooling inflation.

Spot gold was little changed at $1,953.09 per ounce at 1236 GMT. U.S. gold futures fell 0.4% to $1,956.60.

The dollar hovered close to a more than one-year low against its rivals, making gold less expensive for other currency holders.

Gold bugs are curbing their enthusiasm for an "imminent end to Fed rate hikes, with markets cautious that U.S. consumers may still harbour enough spending power to reignite the U.S. inflationary pulse", Exinity Chief Market Analyst Han Tan said.

Last week's U.S. data hinted at a disinflationary trend as consumer prices grew at their slowest pace in more than two years.

Investors largely expect the Fed to hike rates in the July 25-26 meeting, likely stopping there before cuts next year.

"(And) if the Fed does signal that the July hike would mark the ultimate peak for this rate-hiking cycle, that may provide renewed impetus for bullion bulls to chase after $2,000 once more," Tan added.

Bullion posted its biggest weekly gain since April last week on bets that the Fed could pause rate hikes after July.

Lower interest rates support gold as they decrease the opportunity cost of holding non-yielding bullion.

Meanwhile, data showed China's economy grew at a frail pace in the second quarter as demand weakened at home and abroad, raising pressure on policymakers to deliver more stimulus to shore up activity.

With hopes of stimulus measures in July or August, riskier assets such as base metals and equities would be bought more, which could dent gold's demand, said Vandana Bharti, assistant vice-president of commodity research at SMC Global Securities.

Spot silver fell 0.5% to $24.79 per ounce, platinum lost 0.4% to $967.34, and palladium eased 0.2% to $1,269.07.