Gold was trading near a six-week low on Monday, and was headed for its first monthly decline this year on growing optimism about the U.S. economy and weak physical demand in Asia.
Gold has lost nearly $100 an ounce in the last 10 trading sessions, moving further away from a six-month high hit mid-March.
The metal's safe-haven demand had been bolstered earlier in the year when fears over economic growth in the United States and emerging markets hurt global equities, and tensions between Russia and the West were high.
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Physical demand in Asia could pick up if prices fall to $1,180-$1,200, Chen said.
Spot gold rose 0.1 percent to $1,296 an ounce, not far from a six-week low of $1,285.34 hit on Friday. It is down nearly 3 percent for the month.Recent U.S. data has been strong, indicating that the economy is recovering well after severe weather conditions.
Federal Reserve Chair Janet Yellen indicated earlier this month that interest rates could rise in the first half of 2015.
Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, had been an important factor driving bullion higher in recent years.
Read MoreFed's Evans sees no rate rise before mid-2015
Investors are now eyeing U.S. nonfarm payrolls data on Friday for further clues about the economy.
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