Fed's Daly says it'll soon be time to recalibrate policy

Sept 1 - Gold hit a more than four-month high on Monday, as increased bets for a U.S. Federal Reserve interest rate cut this month lifted bullion's allure, while silver rose above $40 per ounce for the first time in more than a decade.

Spot gold rose 1.2% to $3,486.86 per ounce by 0641 GMT, hitting its highest point since April 23. U.S. gold futures for December delivery gained 1.1% to $3,554.60.

"Dovish comments from San Francisco Fed President Mary Daly helped traders looked past a higher core PCE read on Friday, and kept the door open for a 25-basis-point rate cut this month," City Index senior analyst Matt Simpson said.

A U.S. appeals court has also deemed most of U.S. President Donald Trump's tariffs illegal, weighing further on the dollar and sending gold to a four-month high, Simpson said.

Data showed that the U.S. PCE price index rose 0.2% month-on-month, and 2.6% year-on-year, both in line with expectations.

In a social media post on Friday, Daly reiterated her support for a rate cut, given the risks to the labour market.

Non-yielding gold typically performs well in a low-interest-rate environment.

On the trade front, U.S. Trade Representative Jamieson Greer said on Sunday the Trump administration is continuing its talks with trading partners despite a U.S. appeals court ruling that most of Trump's tariffs are illegal.

Spot silver jumped 2.2% to $40.56 per ounce, the highest level since September 2011.

"The U.S. bank holiday is contributing to thinner liquidity, which is also exacerbating some of the moves in gold and silver," said KCM Trade's chief market analyst, Tim Waterer.

"Silver is making a move higher in response to expectations of lower U.S. rates, while a tight supply market is helping to maintain an upward bias."

Platinum gained 1.5% to $1,384.68 and palladium climbed 0.8% to $1,118.06.