Gold shed nearly 1.5 percent in Europe on Monday as investors sold back the safe haven asset after Sunday's historic election in Iraq saw only sporadic violence, dealers said. "The elections passed off fairly well - all things considered - but I think the markets had expected a lot worse," one said. Spot gold stood at $420.50/421.30 an ounce by 1554 GMT, down sharply from $426.00/426.80 late in New York on Friday and just off a near three-week low of $419.75.
Iraq's Electoral Commission said counting in the country's poll was going smoothly on Monday - a process that could take up to 10 days.
Due to gold's traditional role as a safe-haven against economic or political uncertainty, dealers had expected support for bullion on any derailment of the election.
Bullion market focus was now seen shifting back to currencies and US monetary policy, with the Federal Reserve meeting to decide on interest rates on Tuesday and Wednesday.
"We could see more losses. If the relatively successful poll in Iraq means there will be more stability in the world, then that's not good news for gold," a second trader said.
Markets were positioned for a US interest rate rise, which would raise demand for the dollar and potentially spell more pressure on gold.
The euro was last quoted at $1.3034, not far from the day's high.
The market was also expected to pay close attention to a Group of Seven finance ministers meeting on Friday and Saturday, President George W. Bush's State of the Union address and US economic data.
Gold has been hemmed into a $419-428 range for just over two weeks. If it failed to regain its footing above $420, traders said, it risked revisiting the low of this year at $416.15 - the weakest since mid-October 2004.
Silver was expected to continue trading in recent ranges, with resistance placed at $7.00 and support at $6.50. Spot silver was quoted at $6.66/6.69, compared with $6.77/6.80 late on Friday in New York.
Platinum backed down after Japanese buying boosted prices during Asian trade. Spot platinum was at $869.00/873.00 from $871.00/875.00 on Friday, while palladium stood at $187.00/190.00, barely different from $187.00/192.00.