Minneapolis Federal Reserve President Neel Kashkari has said that interest rates need to be higher right now. He believes this should help avoid drastic increases later.

Markets might agree and are leaning slightly towards a rate hike next month. Gold traders, however, don't seem convinced.

Gold rallied to $4,245, its highest level in six weeks after buying accelerated during the Asian session.

Kashkari said upcoming data will be key. The focus now turns to Friday's US jobs report.

July non-farm payrolls are expected to come in at +80,000, up from June's +57,000. A stronger-than-expected result could help the US Dollar Index regain the 100 level.