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 Gold prices inched higher on Monday as investors anticipated a potential interest rate cut by the Federal Reserve this week, with focus on the central bank's language on rate cuts next year.

Spot gold was up 0.1% to $2,652.07 per ounce as of 0155 GMT. Meanwhile, U.S. gold futures slipped 0.2% to $2,670.90.

"A 25 basis point rate cut this week has been fully priced by markets, so the focus will be on whether this will be a 'hawkish cut', where U.S. policymakers may set the stage for a potential rate hold into January, given above-target inflation, some economic resilience and uncertainties over Trump's policies ahead," IG market strategist Yeap Jun Rong said.

Investors view it as a near-given that the Fed will cut rates by a quarter point at its Dec. 17-18 meeting. Markets predict a 93.4% chance of a 25 basis points cut, but have only priced in a roughly 18% chance of another reduction in January, according to CME's FedWatch tool.

On the geopolitical front, Israeli strikes in Gaza killed at least 53 Palestinians, including a journalist and rescue workers, medics said, while the Israeli military said its air and ground forces in the north of the enclave killed dozens of militants and captured others.

Non-yielding bullion tends to shine in a lower interest rate environment and during economic or geopolitical uncertainty.

"Over the past month, gold prices have pulled back from the $2,720 level on at least two occasions, which makes it a key resistance for buyers to overcome ahead to pave the way for more upside," Yeap said.

Spot silver was flat at $30.54 per ounce, platinum shed 0.3% to $922.05, while palladium gained 0.4% to $956.58.