* Dollar set for fourth consecutive monthly decline
* Gold on track for first monthly fall in five
* Silver heads for fifth straight monthly gain
* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser (Recasts, adds quotes, updates prices)
By Diptendu Lahiri
Aug 31 (Reuters) - Gold traded in a narrow $20 range on Monday as it headed for its first monthly decline in five, although a weaker dollar offset pressure from increased appetite for risk.
Spot gold XAU= edged up 0.1% to $1,966.96 per ounce by 1302 GMT. Activity was subdued as a British bank holiday limited trade and after it touched its highest since Aug. 19 at $1,976.14 during the Asian session.
The metal was still down slightly for August, about 0.2%, after a volatile month during which it hit an all-time peak of $2,072.49 before consolidating below the key technical level of $1,900 as investors reassessed their positions from the record run.
U.S. gold futures GCcv1 were steady at $1,975.
"Potential dovish policies from the U.S. Federal Reserve and structural problems in the U.S. economy can take the dollar even lower and this added to the already existing uncertainties makes gold even more attractive," said UBS analyst Giovanni Staunovo.
The dollar .DXY continued its retreat, making gold cheaper for holders of other currencies. USD/
Capping gold's advance, global equities held near record highs as investors bet on continued central bank monetary support to revive the economy from a pandemic-induced slump. MKTS/GLOB
The Fed signalled that its primary overnight interest rate could remain close to zero for years, which decreases the opportunity cost of holding non-yielding gold. the Fed does next is crucial for gold," UBS analysts said in a note.
Real rates should ease further and lift gold, but ambiguity over the Fed's September meeting is a risk, they added.
Gold has gained nearly 30% this year, with its safe-haven appeal bolstered by economic uncertainty stemming from the pandemic as well as the November U.S. elections.
Silver XAG= jumped 1.7% to $27.95 an ounce, on track for a fifth straight monthly gain with an advance of nearly 15%.
Platinum XPT= fell 0.3% to $928.23, while palladium XPD= was little changed at to $2,206.41.