Gold settled slightly lower on Monday, having hit a fresh five-week high earlier after weak U.S. economic data buoyed investors' belief the Federal Reserve would stick with its bullion-friendly stimulus measures at a policy meeting later this week.
Pending home sales slumped 5.6 percent in September, a rate that was far steeper than expected and the biggest drop in more than three years.
The Fed starts its two-day policy meeting on Tuesday and is widely expected to keep its bond-buying stimulus unchanged at $85 billion per month. Most expect the central bank will delay withdrawing stimulus until March 2014.
Spot gold hit a best since Sept. 20 at $1,361.60 an ounce after the data, and was up 0.2 percent to $1,354 an ounce. U.S. gold futures for December delivery settled 30 cents lower at $1,352.20 an ounce.
"Gold is very sensitive to the U.S. data because if more and more figures confirm that tapering will be delayed, that is positive for the U.S. Treasury market and negative for yields,'' Quantitative Commodity Research owner Peter Fertig said.
The dollar held above a nine-month low against a basket of currencies, while U.S. Treasury yields were little changed at 2.5 percent, well below a peak of 3.0 percent recorded at the beginning of September.
Returns from U.S. bonds are closely watched by the gold market given that the metal pays no interest.
Bullion has fallen nearly 20 percent this year on fears that the end of easy money from the U.S. central bank would dim the metal's inflation-hedge appeal.
In the past two weeks, however, gold has gained 7 percent as weak U.S. data and budget battles in Washington looked set to deter the Fed from scaling back asset purchases.
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