Gold fell on Monday as the dollar flattened out near following news that senators may be near an agreement that could end the U.S. government shutdown.
World stocks shrugged off the shutdown in Washington, with investors seemingly confident the conflict between President Donald Trump and Democrats can be resolved swiftly.
"We did see gold reach four-month highs last week on fears an agreement wouldn't be reached and indeed that came to pass. The fact that gold is a bit soft this morning suggests it was largely in the price," said Mitsubishi analyst Jonathan Butler.
Keeping a lid on gold's gains, U.S. Treasury yields rose as investors saw limited economic fallout from the standoff in Washington and instead focused on a global economy motoring ahead.
Rising yields tend to weigh on gold by increasing the opportunity cost of holding non-yielding bullion. They also tend to boost the dollar, making dollar-priced gold costlier for non-U.S. investors.
The U.S. government shutdown entered its third day on Monday, with the Senate set to vote at 12 p.m. on advancing a measure to provide temporary government funding through Feb. 8 and end the shutdown. Analysts at Julius Baer sounded a note of caution.
"While the dollar is unlikely to return to its peak, we still see upside from current levels as accelerating growth should be accompanied by rising interest rates in the United States. This should weigh on gold over the coming months," they said in a note.
Senators announced they had the votes to end the government shutdown Monday after leaving meetings more confident about a compromise deal to allow Congress to pass a short-term funding bill.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose over 2 percent last week, their best week since the week ended Sept. 3.
Among other precious metals, spot silver fell 0.09 percent at $16.985. Platinum dropped 1.73 percent to $995.50, after touching its highest since Sept. 8 at $1,018.80. "Platinum has once again narrowed the price gap to palladium to below $100 per troy ounce," said Commerzbank in a note.
Palladium fell 0.62 percent to $1,097.90 an ounce. It touched record highs last week at $1,138. Flows of palladium out of UK stocks to Hong Kong are picking up as demand from Asian industry grows.