Gold prices rose on Monday as the dollar fell to a more than two-week low, prompting investors to buy bullion, while markets eyed U.S. inflation data for further clues on Federal Reserve rate hikes.

Spot gold was up 0.4% at $1,722.79 per ounce as of 0826 GMT. U.S. gold futures rose 0.3% to $1,733.20.

The dollar index hovered close to its lowest level since Aug. 26, making gold less expensive for holders of other currencies.

"Gold's gains at the onset of this week should prove temporary if the incoming U.S. CPI prints point to a stubborn climb in inflation, forcing the Fed to keep the pedal to the metal with its policy tightening," Han Tan, chief market analyst at Exinity, said.

"Data that underscores the Fed's need to stay ultra-aggressive in its battle against inflation, a theme that's been a constant thorn in gold bulls' side for much of this year, would only further weigh down the zero-yielding precious metal."

The U.S. Consumer Price Index, due on Tuesday, is expected to show that August prices rose at an 8.1% pace over the year, compared with an 8.5% print for July.

"A further indication that inflation may have peaked would be encouraging for the gold market," said Clifford Bennett, chief economist at ACY Securities.

Markets have ramped up their expectations for a 75 basis point (bp) Fed hike this month to more than 90%.

Gold tends to suffer in a higher interest rate environment. Fed officials on Friday ended their public comment period ahead of the central bank's Sept. 20-21 policy meeting, with strong calls for another oversized rate increase to battle sky-high inflation.

Spot silver rose 2.1% to $19.18 per ounce, its highest in more than two weeks.

Platinum was 1.5% higher at $893.98 and palladium rose 0.5% to $2,183.49.

(Reporting by Arundhati Sarkar and Eileen Soreng in Bengaluru; Editing by Edmund Klamann)