Gold prices edged higher on Monday, although the gains were capped on fears of aggressive rate hikes by the U.S. Federal Reserve.

Spot gold was up 0.3% at $1,664.50 per ounce. U.S. gold futures were steady at $1,673.20.

The dollar steadied against its rivals.

“The correction in the U.S. dollar at the moment has unquestionably given gold a little bit of a lift. But I suspect that the expectations of further rate rises is limiting those gains,” said Ross Norman, an independent analyst.

On Friday, the Fed’s No. 2 official added her full endorsement of the U.S. central bank’s higher-for-longer game plan for interest rates to curb inflation.

Last month, the Fed raised its policy rate by 75 basis points, its third straight increase of that size, and signaled more large hikes to come this year.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding it.

Prices of bullion fell more than 8% in the July-September quarter, marking its worst quarterly performance since end-March 2021.

Looking ahead, investors are awaiting U.S. non-farm payrolls data due on Friday and a host of manufacturing PMI data for insight into the health of the global economy.

“A more lukewarm (payrolls) reading may be preferred by gold bulls for a relief rally, but the absence of any pause in Fed’s policies could still suggest that the overall downward trend may remain intact,” IG market strategist Yeap Jun Rong said.