Gold goes up as the dollar goes down, and traders focus on how the Fed will raise rates.

Gold prices went up on Monday, helped by a slight drop in the value of the U.S. dollar and bets that the Federal Reserve won't raise interest rates by 100 basis points this month.

By 02:54 GMT, spot gold had gone up 0.4% to $1,713.49 per ounce. Last week, it fell to its lowest level in almost a year. Gold futures in the U.S. went up 0.5% to $1,711.80.

The dollar fell 0.1% against its rivals, moving further away from a near 20-year high that was reached last week. This made bullion priced in dollars cheaper for people with other currencies. [USD/]

"The market walked back the idea of a 100-bp rate hike after the University of Michigan inflation component came in weaker on Friday," said Stephen Innes, managing partner at SPI Asset Management.

In a preliminary survey done by the University of Michigan in July, people said they thought inflation would be 2.8% over the next five years. This is the lowest number in a year and is down from 3.1% in June.

"Central bank hawkishness has already been priced in," and since gold held steady at $1,700 per ounce last week, hawks may be disappointed that the Fed will only raise rates by 75 basis points next week. This could cause shorts to get squeezed a bit.

Fed officials gave signs on Friday that they would stick to a 75-bp rate hike at their meeting on July 26-27. This was done to stop inflation from going up too fast.

At its policy meeting later this week, the European Central Bank is likely to raise rates by 25 basis points. Even though gold is seen as a way to protect against inflation, the fact that it doesn't pay interest makes it less attractive when interest rates go up.