Gold prices edged lower on Monday as investors preferred the safety of the dollar in the face of mounting concerns over the US-China trade dispute, and in turn, global growth.
Spot gold dropped 0.4 percent to $1,308.47 per ounce at 10:26 a.m. EST (1526 GMT) having risen for the previous two sessions. US gold futures declined 0.5 percent to $1,312 per ounce.
"The big factor here is the strengthening of the US dollar," which is being supported by the trade dispute, said Bart Melek, head of commodity strategies at TD Securities in Toronto.
"Any sort of a lack of agreement between the United States and China weakens the global emerging market currencies and that means, in relative terms, the US dollar does better, which is negative for gold," he said.
Trade talks between Washington and Beijing are set to resume this week with a delegation of US officials travelling to China for the next round of negotiations.
But US President Donald Trump last week said he did not plan to meet with China's President Xi Jinping before the March 1 deadline, dampening hopes that a trade pact might be reached quickly.
The dollar index was at a near seven-week high, potentially denting demand for the metal amongst holders of other currencies.
"Gains in US and world stock markets are also a bearish element for the safe-haven metals," Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note to clients.
The precious metal could be vulnerable to more corrections if the dollar strengthens further, analysts said.
"With US employment numbers still quite strong and people moving into dollar for safe haven purposes, there is really no good reason why gold should take off much higher," TD's Melek said.
But the yellow metal held above the key $1,300-per-ounce level, supported by uncertainties surrounding the US Federal Reserve's monetary policy and another possible government shutdown looming in Washington, analysts said.
While gold is supported by the Fed's policy, prices will likely remain rangebound until there is clarity on the trade front and a government shutdown, OANDA analyst Edward Moya said in a research note.
Among other precious metals, platinum fell 1.4 percent to $786.50 per ounce, after touching its lowest in three weeks at $783.35.
"The spot price of platinum breaking through the $800 level has forced some hedge funds to head for the exit," Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, said in a note.
"With a lack of any good news to support a rally in this market, I expect the sell off to continue."
Palladium slid 1.3 percent to $1,383.95 after rising to its highest in since Jan. 18 at $1,404.50 earlier in the session. Silver dropped 0.6 percent to $15.73 an ounce.
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