Gold prices drifted lower on Monday, as market players looked ahead to a busy week of economic data, including monthly inflation indicators, for further clues on the timing of the next Federal Reserve rate hike.

Besides the inflation data, this week's calendar also features reports on JOLTS job openings, nonfarm productivity and unit labor costs, producer prices as well as weekly jobless claims.

Investors will also keep an eye out on a number of Fed speakers for any new insight on when and how the central bank plans to pare back its massive balance sheet, with most of the focus falling on comments from New York Fed President William Dudley.

Markets remain skeptical the Fed will raise rates in December, according to Investing.com’s Fed Rate Monitor Tool, due to worries over the subdued inflation outlook, but it is widely expected to start the process of reducing its balance sheet by September.

Focus this week will also be on headlines coming out of Washington, even as Congress slows down for August recess. The investigation into U.S. President Donald Trump campaign's ties to Russia will remain on the agenda.

Comex gold futures for August were at $1,262.96 a troy ounce by 2:45AM ET (0645GMT), down $1.60, or about 0.1%.

It touched its lowest since July 26 at $1,259.80 on Friday, as the dollar jumped after a key report on payrolls in July showed U.S. employers hired more workers than expected.

It ended the week down 0.4%, its first weekly decline in four.

Gold has been well-supported in recent weeks as fading expectations for a third Fed rate hike this year combined with deepening political turmoil in the White House boosted the appeal of the precious metal.