* All precious metals eye monthly gains
* Dollar set for second straight monthly fall
* Markets vindicated by key U.S. inflation reports -analyst
July 31 (Reuters) - Gold marched towards its best month in four on Monday as top central banks switch to a more cautious posture about further moves in their year-long round of global monetary tightening.
Spot gold was down 0.2% at $1,955.20 per ounce by 0940 GMT, as the dollar firmed 0.1%. U.S. gold futures slipped 0.3% to $1,955.30.
But gold was set to notch up an about 1.9% gain this month, which would be its biggest since March, as bets that U.S. interest rates could be nearing their peak put the dollar on track for a second straight monthly decline.
"We remain in a supportive scenario because there's a recession risk and the expectation that central banks are going to be more dovish next year is the main catalyst supporting the price of gold," said Carlo Alberto De Casa, market analyst at Kinesis Money.
Overall weakness in the dollar in the short term is helping gold consolidate its recovery, De Casa added.
Data on Friday showed annual U.S. inflation rose at its slowest pace in over two years in June, cementing expectations that the Federal Reserve was closer to ending its fastest rate hiking cycle since the 1980s.
Higher interest rates discourage the buying of non-interest-paying bullion, which is priced in dollars.
"Markets feel vindicated with their assessment that Fed rates are at or near their terminal rate, with key inflation reports from the U.S. all pointing towards a faster pace of disinflation," said Matt Simpson, senior analyst at City Index.
Two European Central Bank policymakers on Friday also raised the prospect of an end to its longest string of rate rises.
Other precious metals looked set to post monthly rises, with silver leading at 6.8%, but down 0.2% on the day at $24.29 an ounce. Platinum dropped 0.5% to $930.40 and palladium eased 0.5% to $1,239.90. (Reporting by Deep Vakil and Swati Verma in Bengaluru; Editing by Sonia Cheema)
