Gold fell as much as 1.4% amid a stronger US dollar and easing demand for safe-haven assets.
The dollar gained strength on news that Japan might adjust debt levels, which also pushed global bond yields higher.
Investors are watching for signals of progress in US-EU trade talks and upcoming US inflation data.
Despite the recent decline, gold has seen a significant year-to-date gain of over 25%, with short-term price forecasts suggesting a rebound towards $3,500 per ounce.