While Cyprus's deal to shut down the country's second largest bank in return for 10 billion euros ($13 billion) in rescue funds removed the immediate risk of a financial meltdown, the European Central Bank worked to allay anxiety that this could have negative implications for other euro zone states.
(Read More: Gold Eases Below $1,600; Cyprus Effect Fades)
Gold, which typically benefits from economic uncertainty, pushed to a three-week high of $1,616.36 an ounce last week on worries around the Cyprus bailout but dropped to a 1-1/2 week low of $1,589.49 on Monday after the 11th-hour rescue.
Spot gold was down 0.4 percent at $1,598.76 an ounce. Prices were however still on course for their first monthly gain - up around one percent so far this month - after posting declines in every month since October.
(Read More: The Price Where You Can Short Gold)
U.S. gold futures for April delivery stood at $1,598, down 0.4 percent, amid low volumes ahead of the April contract expiry.
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