(Reuters) Gold prices inched higher on Monday but were off one-year highs reached late last week as mixed economic data prompted investors to reassess the U.S. Federal Reserve's rate hike trajectory and boosted the dollar.
Spot gold was up 0.1% at $2,004.74 per ounce, as of 0353 GMT. U.S. gold futures rose 0.1% to $2,017.50.
The dollar index was 0.1% higher, making bullion expensive for overseas buyers.
Gold is likely to trade with "positive bias but can see some initial correction", although a "major downfall" in prices is not expected as uncertain global economic and geopolitical tensions support its safe haven status, said Hareesh V, head of commodity research at Geojit Financial Services.
Gold dropped 2% on Friday after data showed U.S. core retail sales slipped 0.3% last month, but gains in January and February put consumer spending on track to accelerate in the first quarter.
Other data showed households expected inflation to rise over the next 12 months. A separate report showed production at U.S. factories fell in March, but eked out a modest gain in the first quarter.
"Gold also maintains a strong correlation with real yields, and price action continues to be sensitive to U.S. inflation and employment data," Standard Chartered analyst Suki Cooper said in a note.
On Friday, Fed Governor Christopher Waller said U.S. central bankers need to move interest rates higher still, while Atlanta Fed President Raphael Bostic said one more quarter-percentage-point hike can allow the Fed to end its tightening cycle.
The CME FedWatch tool shows markets are pricing in a 80.9% chance of a 25 basis point hike in May.
Higher interest rates dim non-yielding bullion's appeal.
"While $2,075-$2,100/oz remains a key hurdle... we remain biased for a grind higher," analysts at Citi said in a note and added that financial stability stress present positive tailwinds for long-duration safe haven assets such as gold.
Spot silver fell 0.2% to $25.29 per ounce, platinum dipped 0.7% to $1,037.30 and palladium shed 0.7% to $1,493.37.