Gold dropped for a fourth session in five on Monday, as the dollar firmed after fresh comment from Federal Reserve officials that the central bank could look at raising U.S. interest rates soon.
Fed official Jeffrey Lacker on Friday repeated his call for the U.S. central bank to consider raising rates in June and said there is no shame in adjusting them lower again if economic data demands it.
Separately, San Francisco Fed President John Williams told Reuters that as the U.S. job market improves, the risk of an unexpected setback derailing the recovery once the Fed raises rates is receding.
"Our economists think that a June rate hike, while possible, is unlikely,'' said Barclay's in a note. "However, the gold market came under pressure with June not having been ruled out.''
Spot gold slipped almost 1 percent to a session low of $1,196.23 an ounce, before reclaiming some lost ground to $1,199, down 0.7 percent. U.S. gold settled down $5.30, or 0.4 percent, at $1,199.30 an ounce.
"The fact that we are stuck at around $1,200 an ounce is to do with what U.S. interest rates are doing ...it's just a matter of time until former lows around $1,140 are broken," ABN Amro commodity analyst Georgette Boele said.
Investors tend to shun gold, which does not pay interest, when market expectations point to U.S. interest rates rising.
"Gold remains hostage to broader macro forces; the backdrop this year has been the timing of the Fed rate hike and underperformance of emerging markets," Macquarie analyst Matthew Turner said.
"We are up towards the peak for the dollar that we saw earlier this year and are now waiting to see whether it carries on its rally or falls back. In the short term that sentiment is going to be important for gold."
The dollar was modestly higher against a basket of currencies, as weak Chinese export data knocked commodity currencies.
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China's exports shrank 15 percent in March while import shipments fell at their sharpest rate since the 2009 financial crisis, deepening concern about growth in the world's No.2 economy.
Hedge funds and money managers raised their bullish bets on gold futures and options during the week to April 7 on views that the Fed could delay a rate increase after disappointing U.S. payrolls data this month.
Demand in China remained tepid with premiums on physical gold on the Shanghai Gold Exchange at $1-$2 an ounce over the global spot benchmark on Monday from a small discount late on Friday.
In other news, China's state-run SGE said on Sunday that it was working on launching new price benchmark-fixing products as a new service to market participants.