Gold prices edged higher on Tuesday, supported by a softer dollar, as investors awaited the release of key U.S. jobs data that could shape expectations for the Federal Reserve's policy path in the new year.

Spot gold was up 0.1% at $4,311.64 per ounce, as of 0230 GMT, extending a year-to-date rally of more than 64% that has seen bullion smash multiple records.

U.S. gold futures were little changed at $4,333.20.

The U.S. dollar hovered near a two-month low in early Asian trade, lending support to greenback-priced bullion.

"The dollar's performance remains subdued which is helping to keep gold prices on the front foot ... Markets believe that the Fed could be underestimating the number of rate cuts next year," KCM Trade Chief Market Analyst Tim Waterer said.

Traders are pricing in a 76% probability of a 25-basis-point rate cut in January, with some expecting two cuts, according to CME's FedWatch tool. This week's data docket is expected to offer fresh clues on how quickly the Fed may ease policy in 2026.

Should labour market data reinforce the view that employment remains a weak spot, gold could benefit as it strengthens the case for earlier rate cuts, Waterer said.

Fed Governor Stephen Miran said current above-target inflation does not reflect underlying supply and demand dynamics that are generating price increases much closer to the central bank's 2% target.

The combined U.S. employment reports for October and November, due later on Tuesday, will lack several details after a government shutdown curtailed data collection, including October's unemployment rate.

Non-yielding bullion typically thrives in lower-rate environments.

ANZ analysts flagged upside risks, saying gold could test $5,000 an ounce next year.

Spot silver fell 1.2% to $63.11 an ounce, hovering near Friday's record high of $64.65.

KCM's Waterer said the metal retains a bullish undertone as industrial demand shows no signs of abating, after a 121% rally this year driven by firm industrial and investment demand and tightening inventories.

Spot platinum climbed 1.9% to $1,816.15, while palladium rose 0.6% to $1,576.25.