* U.S. PCE data due on Friday

* Palladium gains more than 4%

June 24 (Reuters) - Gold prices edged up on Monday as U.S. Treasury yields eased, while investors awaited inflation reading due later this week that could influence the Federal Reserve's interest rate trajectory.

Spot gold was up 0.4% at $2,330.56 per ounce as of 0834 GMT, after dropping 1% on Friday due to a stronger dollar. U.S. gold futures rose 0.5% to $2,343.30.

Benchmark 10-year U.S. Treasury yields edged down, making non-yielding bullion more attractive for investors.

"The focus remains on incoming U.S. economic data and if that data confirms a soft landing, allowing the Fed to cut interest rates," UBS analyst Giovanni Staunovo said.

"We continue to see gold supported, targeting a price of $2,600 per ounce at the end of the year."

The Personal Consumption Expenditures (PCE) data, the Fed's preferred measure of inflation is due on Friday. Through this week, at least five Fed officials will speak, including San Francisco Fed President Mary Daly, Fed Governors Lisa Cook, and Michelle Bowman.

Traders are currently pricing in a 66% chance of Fed rate cut in September, according to CME FedWatch Tool.

Lower rates reduce the opportunity cost of holding bullion.

Data on Friday showed that U.S. business activity crept up to a 26-month high in June but price pressures subsided considerably.

On the geopolitical front, eight Palestinians were killed on Sunday in an Israeli airstrike on a training college near Gaza City being used to distribute aid.

Among other precious metals, spot silver rose 0.5% to $29.68 per ounce and platinum gained 0.6% to $998.35.

Palladium gained 4.6% to $992.53. In the previous session, prices hit a one-month high and briefly broke above the key level of $1,000 per troy ounce in volatile trade as some investors covered their short positions and the market was tight for nearby physical supply.

(Reporting by Daksh Grover in Bengaluru; Editing by Mrigank Dhaniwala)