"Last week was all dollar-driven," Afshin Nabavi, head of trading at MKS in Switzerland, said. "Stop after stop was triggered. A break of $1,200-1,225 only would bring some fresh buying, otherwise (we'll see) a trading range of $1,150-1,190."
Gold rose more than 7 percent to last week's peak after U.S. jobs data on Oct. 2 disappointed financial markets, prompting investors to dial back expectations for an imminent increase in U.S. interest rates and lifting the dollar.
Analysts said last week's the move showed signs of becoming overstretched. Hedge funds and money managers raised their bullish bets in COMEX gold and silver to near five-month highs in the week ended Oct. 13, U.S. Commodity Futures Trading Commission data showed on Friday.
"The biggest threat to gold right now is the big jump in speculative long bets during the past couple of weeks," Saxo Bank's head of commodities research Ole Hansen said.
"It did not take long for the ECB either to come out on the attack against the rising euro and the EUR/USD retracement since then has also sapped confidence a bit."
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The dollar climbed 0.4 percent against a basket of currencies and rose against the euro as investors waited to see whether the European Central Bank would unveil more stimulus plans at a meeting this week.
European stock markets gave up early gains and Wall Street traded lower after U.S. bank Morgan Stanley reported a slump in quarterly profit, adding to signs of woe among the world's biggest banks.
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, reported its first outflow in over a week on Friday, of 6.3 tons.
Silver was down 1.3 percent at $15.84 an ounce, while platinum was up 0.2 percent at $1,013.15 an ounce and palladium was down 1.7 percent at $681.40 an ounce, having earlier touched its lowest since Oct. 1 at $664.10.