Gold fell for a second straight day on Tuesday as global equities rallied on easing political uncertainty in Britain and hopes for more economic stimulus, which in turn curbed demand for assets perceived as a safe haven.
Spot gold fell as much as 1.54 percent to $1,334.01 an ounce. U.S. gold was down 1.59 percent at $1,335. Gold futures settled at $1335.30 on Tuesday.
"Tensions in Britain are easing for now, as the country will soon have a new prime minister," ActivTrades chief analyst Carlo Alberto de Casa said.
"With the British pound gaining some ground, demand for gold and other safe havens is decreasing," he said, adding that the next support level for gold would be around $1,340.
Gold has gained about $100 an ounce since the United Kingdom voted to leave the European Union, with worried investors piling their cash into safe-haven assets.
However, Asian stocks hit a 2-1/2 month peak on Tuesday and European and U.S. shares were on track for another day of gains on hopes of more stimulus from global policymakers.
"The additional stimulus packages will continue to create a challenging environment for investors looking for a return because they are not getting it through bonds and as long as we have that scenario, then the alternatives are currently stocks but also precious metals," Saxo Bank senior manager Ole Hansen said.
Japan's ruling coalition fanned expectations of more fiscal stimulus, while the Bank of England could cut rates as soon as Thursday following its monthly policy meeting.
Markets were also assessing whether the latest U.S. jobs data has boosted the prospects for an interest rate increase by the U.S. Federal Reserve.
Gold came under pressure after strong U.S. non-farm payrolls data on Friday boosted some expectations for a U.S. rate rise.
Kansas City Federal Reserve President Esther George said on Monday that U.S. interest rates were too low and signalled that she could be ready to resume her push within the Fed's rate-setting committee for increases.
Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which the metal priced.
"Not too long ago, gold prices would have withered on prospects of higher stock prices, but not this time around; investors are thinking that the spate of monetary easing is likely to persist for some time to come, keeping both gold and equities fairly well supported," INTL FCStone said in a note.
The European Central Bank will not ease monetary policy any further at its meeting next week, according to an overwhelming majority of respondents in a Reuters poll of euro money market traders.
Silver futures were down 0.66 percent at $20.17 an ounce. Palladium futures rose 0.60 percent to $629.50.
Spot platinum, which rose to a 13-month high of $1,104.10 on Monday, fell for the first time in two weeks, down 1.09 percent at $1,087.49.