Gold prices inched higher on Monday, supported by a softer dollar, while investors awaited a slew of U.S. economic data including the December nonfarm payrolls report for further guidance on the Federal Reserve's interest rate stance.

Spot gold rose 0.2% to $2,643.69 per ounce by 0229 GMT. U.S. gold futures climbed 0.1% to $2,656.80.

"A subdued start to the week by the U.S. dollar is helping gold to eke out some gains," said Tim Waterer, chief market analyst at KCM Trade.

How the U.S. jobs data fares this week could hold the key to whether gold breaks out of its recent range, he said, adding that: "There is a plethora of U.S. data due for release this week (including ISM Services PMI data), and any downside misses could hurt the USD and help gold."

The U.S. jobs report, due on Friday, is expected to provide more clues to the Fed's rate outlook after the U.S. central bank rattled markets last month by reducing its projected cuts for 2025.

Investors are also awaiting ADP hiring and job openings data, as well as minutes of the Fed's last policy meeting, for further direction.

Gold flourishes in a low-interest-rate environment and serves as a hedge against geopolitical uncertainties and inflation.

U.S. President-elect Donald Trump is set to return to office on Jan. 20 and his proposed tariffs and protectionist policies are expected to fuel inflation.

This could prompt the Fed to go slow on rate cuts, limiting gold's upside. After three rate cuts in 2024, the Fed has projected only two reductions for 2025 due to persistent inflation.

The U.S. central bank's benchmark policy rate should stay restrictive until it is more certain that inflation is returning to its 2% target, Richmond Federal Reserve President Thomas Barkin said on Friday.

Spot silver gained 0.2% to $29.67 per ounce, platinum shed 0.5% at $933.60, and palladium fell 0.9% to $920.09. (Reporting by Rahul Paswan in Bengaluru; Editing by Subhranshu Sahu)