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Gold prices hit an eight-month high on Monday, helped by a drop in the dollar after U.S. economic data late last week raised hopes for slower rate hikes from the Federal Reserve going forward.

Spot gold rose 0.6% to $1,876.39 per ounce by 10:15 a.m. ET (1515 GMT), after hitting its highest since May 9 earlier in the session.

U.S. gold futures were up 0.7% at $1,882.40.

The dollar slipped 0.7% to its lowest in seven months, making gold cheaper for overseas buyers. Benchmark U.S. 10-year Treasury yields were hovering near a three-week low.

"Interest rates are looking like they're going to continue higher. But they do have a limit of what they can do and the market is pricing that in," said Bob Haberkorn, senior market strategist at RJO Futures.

"We are also seeing some flight to safety. Technically, gold looks like it has more room to go because it's been strong through all these resistance points that we continue to see."

Gold prices jumped nearly 2% on Friday after data showed a moderation in U.S. wage growth and a contraction in activity in U.S. services industries in December.

Money market bets show 75% odds of a 25-basis point hike at the Fed's February policy meeting, with the terminal rate expected just below 5% by June.

Higher interest rates dim bullion's appeal as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.

Traders now await Fed Chair Jerome Powell's speech at a central bank conference in Stockholm on Tuesday and closely watched U.S. consumer price index data due later this week that could offer more cues on the U.S. rate hike path.

Among other metals, spot silver rose 0.4% to $23.91 per ounce, platinum was down 0.3% to $1,087.25, while palladium dropped 1.6% to $1,775.84.

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