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.