Gold prices hovered close to key $1,800 level on Monday, supported by a weaker dollar as investors assessed how the U.S. Federal Reserve could respond to inflationary pressures after its chair said inflation could last until well into next year.

Spot gold was up 0.3% at $1,798.51 per ounce, as of 0442 GMT. U.S. gold futures gained 0.2% to $1,799.10.

On Friday, the metal rallied to its highest since early September before trimming gains after Fed Chairman Jerome Powell said the U.S. central bank should start reducing its asset purchases. 

Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for holding bullion which pays no interest.

"There is some short-term momentum building in gold as some investors look for an inflation hedge and see gold as a potentially provider of that," IG markets analyst Kyle Rodda said, adding that $1,830 is a key resistance level if gold breaks above $1,800.

In the long term, however, Rodda said gold's trajectory hinged mainly on how aggressive central banks would act to contain inflation.

Market participants now eye the Bank of Japan and the European Central Bank (ECB) meetings due on Thursday. Neither of the two central banks is expected to change policy, but market indicators suggest higher inflation than the ECB's guidance. 

Adding to gold's support, the dollar =USD eased 0.1%, making bullion more appealing to buyers holding other currencies. 

On the technical front, gold may retest a resistance at $1,814 per ounce, a break above could lead to a gain to $1,826, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.7% to $24.48 per ounce. Platinum was up 0.4% at $1,045.03 and palladium gained 0.6% to $2,034.61.

(Reporting by Nakul Iyer in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips) ((; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 0417; Reuters Messaging: