Traders will be eyeing this week's U.S. economic data closely, particularly the bellwether non-farm payrolls report on Friday, for clues on whether or not the Fed will move before the end of the year.
"We are back to watching U.S. data as the next six weeks' output most likely will determine the output of the December FOMC (Federal Open Market Committee) meeting," said Saxo Bank head of commodities research Ole Hansen.
The payrolls report will be particularly scrutinized, he said. "A stronger-than-expected number will put the cat among the pigeons, considering it would be the first above-expectation number since May."
Rising interest rates would weigh on gold by lifting the opportunity costs of holding non-yielding assets while boosting the dollar, in which bullion is priced.
The dollar rose 0.6 percent against a basket of major currencies, pressuring gold.
"With yields being universally low, investors are continuing to find better value in stocks rather than gold or silver, which pay no interest or dividends and cost money to store," said Fawad Razaqzada, technical analyst for Forex.com.
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"As investors continue to allocate growing proportions of their trading capital in assets that pay higher yields, precious metals will likely remain out of favor for the foreseeable future."
Holdings in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, fell to a three-week low by nearly 3 tons to 689.28 tons on Monday.
"Physically backed gold products (have) hardly recorded inflows since summer, signaling investor reluctance to return to the market," Julius Baer said in a note.
Silver was down 1.2 percent at $15.21 an ounce, platinum was down 1.5 percent at $957.50 and palladium was down 1 percent at $640.75.