Gold prices slipped to start the week, pressured lower by traders who made bets the precious metal would fall.
Most investors held fire ahead of the U.S. Federal Reserve's policy meeting later this week.
"The market is on hold ahead of the U.S. Federal Reserve's meeting, and expects comments on further quantitative easing measures," MKS Finance's head of marketing Frederic Panizzutti said.
"Today's trade should be pretty quiet, with gold players watching euro/dollar movements, looking for any indication of what is going to happen in the next few days," he added.
(Read More: HSBC Cuts 2013 Gold Forecast)
The Federal Open Market Committee (FOMC) policy statement on Wednesday is likely to provide the next short-term direction for gold. Accommodative policy is seen as positive for the metal, as rampant cash printing would prompt currency debasement.
U.S. non-farm payrolls data on Friday will also be examined for more clues on the state of the world's largest economy.
On the wider markets, the euro held below an 11-month high against the dollar as investors awaited the ECB's monthly data on bank lending to companies and consumers for confirmation that growth is returning to the economy.
Signs that the euro zone crisis is stabilising and the U.S. recovery is gaining traction drove investors to the higher-yielding equity market, sending Wall Street up for the eighth straight day on Friday and out of non-yielding gold.
Iraqi Gold Holdings Decline
The latest gold reserves data from the International Monetary Fund showed Korea and Russia raised their gold holdings in November and December respectively, while Iraq cut its holdings by a quarter in November, reversing some recent efforts to bolster its reserves.
Physical buying ticked up in Asia, but was lacklustre compared to the past few years when buying typically surged ahead of the Lunar New Year festival, including in China, which is vying with India to be the world's top gold consumer.