Gold prices hit a more than one-week peak on Monday, as inflationary pressures due to surging oil prices helped cushion the impact of a US Treasury yield rally after an upbeat jobs report, while a drop in equities also boosted bullion's appeal.
Spot gold rose 0.3% to $1,812.80 per ounce by 0853 GMT, after hitting its highest since Jan. 27 at $1,814.91 earlier in the session. US gold futures climbed 0.4% to $1,814.10.
"The largest component of inflation currently, beyond the supply chain issues, is oil prices. And this is a problem no matter how high you move interest rates," said Stephen Innes, managing partner at SPI Asset Management.
"Gold is getting a little bit defensive, realizing that we could be in this state for hyperinflation."
Brent crude oil prices rose to their highest since October 2014.
Limiting gold's gains, the dollar firmed, while yields on benchmark 10-year US Treasuries stayed close to their highest levels since December 2019 hit on Friday.
US inflation data for January is due on Thursday and strong data could further fuel Federal Reserve's plan to raise interest rates after the US employment report showed nonfarm payrolls jumped by 467,000 jobs last month.
After the US jobs data, the market is pricing in more than five rate hikes at the moment and this week's inflation data will provide further cues on this, said Harshal Barot, a senior research consultant for South Asia at Metals Focus.
Bullion is considered a hedge against inflation and geopolitical risks, yet rate hikes would raise the opportunity cost of holding non-yielding bullion.
Lingering tensions between the West and Russia over Ukraine also supported gold.
Elsewhere, silver jumped 1.3% to $22.78 per ounce, platinum fell 0.6% to $1,017.74, and palladium rose 0.4% to $2,293.90.