Gold prices fell from Friday`s 13-month high as relief that North Korea did not conduct a missile test over the weekend helped to lift global stocks, the U.S. dollar and bond yields on Monday.
Demand for safer assets, including gold, was also weakened after hurricane Irma wreaked less damage than feared in Florida.
Spot gold was down 0.9 percent at $1,334.91 an ounce by 1143 GMT, on track for its worst day since July 7. On Friday it touched $1,357.54, the highest level since August last year.
U.S. gold futures for December delivery were down 0.9 percent at $1,339.70.
Gold had been lifted last week by fears of a North Korean missile launch and the impact of hurricane Irma on the U.S. economy, helping to drive the dollar to its weakest since January 2015 and U.S. bond yields to 10-month lows.
"Both of these events failed to materialise in a major way," said Saxo Bank analyst Ole Hansen. "The short term stage has been set for some consolidation (in gold prices). Much depends on where the dollar and bonds decide to go."
A stronger dollar makes gold more expensive for holders of other currencies, potentially reducing demand, while higher bond yields increase the opportunity cost of non-yielding bullion.
Uncertainty over North Korea is likely to keep demand for gold high, preventing significant price falls, Commerzbank analysts said in a note.
North Korea on Monday warned the United States that it would pay a "due price" for efforts to impose fresh sanctions on Pyongyang.
Technical support for gold was $1,325-$1,330, said MKS PAMP trader Sam Laughlin.
Meanwhile, speculative investment in gold increased as hedge funds and money managers raised their net long position in COMEX gold for the eighth week in a row to the highest in nearly a year.
"The net long is getting close to elevated levels," said Hansen. "The long to short ratio is above 20. We haven`t seen that for nearly five years."
Large speculative positioning raises the likelihood of big price swings if investors rush to exit positions when prices change direction.
In other precious metals, silver fell 1.1 percent to $17.73 an ounce, down from Friday`s five-month high of $18.21, while platinum was down 0.5 percent at $999.30.
Palladium gained 0.7 percent to $941 an ounce.
Analysts at Commerzbank said the metal used by the auto industry in emissions-controlling catalytic converters was benefiting from strong Chinese car sales data but that sales there are likely to weaken.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)