Gold fell more than 2 percent on Monday as a rebound in stock markets pointed to a sharper appetite for risk, pulling down prices further from last week's one-year high.
The metal is coming off its strongest weekly rise in more than four years, having peaked at $1,260.60 an ounce on Thursday, its highest since Feb. 6 last year, as turmoil in global equities stoked safe-haven demand for the metal.
After rallying $200 to last week's high from its January low, a retracement was to be expected, analysts said.
Spot gold was down 2.2 percent at $1,209.50 an ounce at 1023 GMT, while U.S. gold futures for April delivery were down 2.3 percent or $28.80 an ounce at $1,210.80.
"It was actually quite positive that gold behaved like a safe haven again, and that showed that in times when there is a lot of volatility in equity markets, gold is benefiting from that," Capital Economics analyst Simona Gambarini said.
"(But) we're not surprised by the correction," Gambarini said. "Gold is probably going to fall further if the situation improves in global equity markets. If the panic subsides, it is probably going to fall to $1,150."