Investing.com-- Gold prices rose in Asian trading on Monday as a weaker dollar lent support, though gains were capped by optimism over potential U.S.-China trade talks and investor caution ahead of the Federal Reserve’s interest rate decision later this week.

As of 00:18 ET (04:18 GMT), Spot Gold rose 0.5% to $3,255.95 per ounce, while Gold Futures expiring in June advanced 0.7% to $3,266.67 an ounce.

The modest rebound follows a 2% pullback last week due to rising risk appetite in global markets amid signs of easing trade tensions between the world’s two largest economies.

US-China trade negotiation hopes, Fed caution limit gains

China on Friday said it was evaluating the possibility of trade talks with the U.S., stating that any dialogue must be based on sincerity and the removal of unilateral tariffs.

The Trump administration has also reached out to China to initiate trade talks, Chinese media reports showed last week.

Hopes of dialogue over trade tensions have eased some market fears, reducing the immediate appeal of safe-haven assets like gold.

Investors were also treading carefully ahead of the Fed’s policy meeting starting later this week.

The Fed is expected to keep interest rates unchanged as the policymakers have adopted a cautious stance to assess the impact of Trump tariffs on inflation.

The decision comes amid ongoing tensions between President Trump and the Federal Reserve, as the President continues to pressure the central bank to lower interest rates.

Higher rates typically weigh on gold, as they increase the opportunity cost of holding non-yielding assets.

The US Dollar Index edged 0.2% lower in Asian trading on Monday, making gold cheaper for foreign buyers.

Among other precious metals, Silver Futures rose 0.3% to $32.340 an ounce, while Platinum Futures were largely muted at $966.25 an ounce.

Copper prices unchanged, China trade data on tap

Copper prices were little changed on Monday as major markets, including the UK, China, were closed for holidays.

Meanwhile, traders eyed upcoming Chinese trade data for further insight into global demand trends and their potential impact on commodity markets.

Copper Futures expiring in July were steady at $4.6910 a pound.