Gold rose 0.6% to $4,432 an ounce, reaching a two-month high. Silver gained 0.1% to $65.82, while platinum and palladium also rose.

On Monday, the yellow metal cleared its 100-day moving average, triggering technical buying and marking another sign of recovery after buyers stepped in on dips in recent weeks and inflows into China's gold-backed ETFs increased.

Many analysts believe gold is about to enter a new bull cycle. What matters most is the character of the current rise. After being trapped in a descending spiral since March, gold is now beginning to break out of that pattern. More importantly, it is managing to climb even as oil prices rise and the dollar strengthens — suggesting traders are starting to view gold through a different lens.

Attention is now focused on fresh US inflation data due Wednesday. According to the median forecast in a survey of economists, the consumer price index is expected to rise 0.1% in July after a 0.4% decline the previous month. After Friday's weak jobs report, a slowdown in price growth could help ease some of the Fed's inflation-related anxieties.

Still, the risk of the opposite scenario remains high, driven mainly by energy. The likelihood of the US central bank raising interest rates — which would be negative for non-yielding gold — would increase if high energy prices intensify inflationary pressure. President Trump on Monday issued new sweeping demands to Iran, and this tougher stance reduces the chances that Washington and Tehran will strike a deal to reopen the Strait of Hormuz and bring an end to the months-long conflict.

Disagreements among Federal Reserve policymakers persist and are growing more pronounced. Yesterday, Cleveland Fed President Beth Hammack said that returning inflation to the 2% target may require a number of rate hikes. Hammack was one of three Fed officials who voted against the decision to keep borrowing costs unchanged.

As for the current technical picture for gold, buyers need to clear the nearest resistance at $4,432. That would open a target of $4,481, above which a breakout would be fairly difficult. The farther target lies around $4,546. On the downside, if gold falls, bears will try to take control of $4,372. If they succeed, a range breakdown would deal a serious blow to bulls and push gold down to a low of $4,304, with the potential to extend to $4,249.