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 Gold prices were hemmed in a tight range on Monday, with gains curbed by fears over big rate hikes by the Federal Reserve, while investors stayed on the sidelines awaiting U.S. inflation data later this week.

Spot gold rose 0.2% to $1,778.34 per ounce by 1038 GMT, after dropping 1% in the previous session. U.S. gold futures edged 0.1% higher to $1,793.10.

The main factor against further recoveries in gold is related to the growing pressure that the Fed could adopt an aggressive stance after the solid U.S. labour data, said Carlo Alberto De Casa, external analyst for Kinesis Money.

But, investors are slightly recalibrating their position after the dollar rally on Friday, and "maybe they are still thinking that the peak of inflation is not too far and the pressure on the Fed could slow down," he added.

Traders currently see a 73.5% probability the Fed continues the pace of 75-basis-point rate hikes for its next policy decision on Sept. 21 to tame soaring inflation after U.S. job growth unexpectedly accelerated in July.

The focus of market participants now shifts to the U.S. consumer price index report due on Wednesday that could offer more clues on the Fed's rate hike path. Analysts polled by Reuters expect annual inflation eased to 8.7% in July from 9.1% previously.

Higher U.S. interest rates raise the opportunity cost of holding non-yielding bullion.

Another hotter-than-expected CPI print should force bullion bulls to reckon with a Fed that has to persist with more supersized rate hikes over the coming months, and such a narrative should prompt spot gold to unwind more of its recent gains, said Han Tan, chief market analyst at Exinity.

Offering some respite to gold, the U.S. dollar pulled back slightly from its highest since July 28. [USD/]

Spot silver rose 1.2% to $20.12 per ounce, while platinum steadied at $932.45.

Palladium rose 2.3% to $2,184.50.