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Gold prices firmed on Monday as expectations that the Federal Reserve will start cutting interest rates later in the year and tensions in the Middle East boosted the allure of the non-yielding bullion.

Spot gold rose 0.4% at $2,310.89 per ounce, as of 0244 GMT. U.S. gold futures gained 0.6% to $2,322.30 per ounce.

Prospects for a Gaza ceasefire appeared slim on Sunday as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages, and Israeli Prime Minister Benjamin Netanyahu flatly ruled that out.

Gold will "remain sensitive to geopolitical developments, with any breakdown of the ceasefire agreement potentially translating to another move higher in price," said IG market strategist Yeap Jun Rong.

Also, "weaker U.S. data offer more policy flexibility for the Fed in terms of rate cuts," helping bullion, he added.

Data on Friday showed that U.S. job growth slowed more than expected in April, reinforcing expectations that the Fed will start cutting interest rates later this year. The Institute for Supply Management (ISM) said its non-manufacturing PMI fell to 49.4 from 51.4 in March.

Markets are pricing a 67% chance of a U.S. rate cut in September, as per CME's FedWatch Tool. Lower interest rates reduce the opportunity cost of holding bullion.

Fed Bank President John Williams said on Friday that the 2% target for inflation is "critical" to the Fed's efforts to achieve price stability, while Austan Goolsbee, president of the Chicago Fed, noted that U.S. rate-path "dot plot" needs more context.

The Perth Mint's gold product sales in April jumped two-fold, while silver sales fell to their lowest level since December, the refiner said.

Spot silver was up 1.4% to $26.91 per ounce.

Platinum lost nearly 0.7% to $948.78 and palladium inched down 0.2% to $944.05.