Gold hit four-week lows on Monday as the dollar held firm and the market waited for comments from a top Federal Reserve official on U.S. monetary policy, but prices were supported by the start of talks on the terms of Britain's departure from the European Union.
Spot gold was down 0.71 percent at $1,247.41 an ounce, down from an earlier $1,248.63, its lowest since May 24. U.S. gold futures settled at $1,246.70, down $9.80.
New York Fed President William Dudley is due to take part in a roundtable with local business leaders later on Monday.
Dudley's comments, if hawkish, could reinforce the dollar's uptrend, which when it rises makes dollar-denominated commodities more expensive for holders of other currencies, potentially weakening demand.
"The dollar is a large part of what's going on with gold," said ING commodities strategist Warren Patterson. "I do see some support from uncertainty about the UK government and the start of Brexit negotiations."
British Prime Minister Theresa May failing to win a parliamentary election earlier this month has, alongside Brexit negotiations starting on Monday in Brussels, fueled political uncertainty.
Weighing on gold is a drop in holdings of physically-backed exchange traded funds to 55.231 million ounces from 55.654 million ounces last Wednesday, when the Fed raised rates and pushed the dollar index to two-week highs.
On the technical front, support for gold kicks in at $1,248, near the 100-day moving average, and resistance sits at $1,260, near the 55-day moving average, traders said.
"There's very strong support at the 200-day moving average, just below $1,240," one trader said.
Elsewhere, palladium was down 0.12 percent at $860.00 an ounce. Earlier this month the metal used to make autocatalysts for gasoline-fueled cars hit a 16-year high at $914.70 an ounce as the market fretted about shortages in the near term.
But analysts say palladium's gains of more than 25 percent so far this year may not be justified given slowing auto sales.
"There are some concerning signals from the two largest gasoline (palladium) auto markets, the U.S. and China," ICBC Standard Bank analysts said in a note.
"The pace of sales growth in both countries has slowed sharply this year. There are a several reasons why, namely credit, a maturing business cycle, and reduced incentives."
U.S. passenger car sales fell 9.8 percent in May from a year earlier. In China the drop was 0.1 percent, but expectations are for further falls over coming months.
Silver fell 0.22 percent to $16.52 an ounce and platinum fell 0.24 percent to $922.25 an ounce.