Gold turned lower and fell below $1,240 an ounce on Monday, as stock markets and the dollar gained, and investors squared positions ahead of closely watched policy meetings of US and Japanese central banks this week. The weak move followed Friday's brief bounce to a 13-month high after the European Central Bank signalled an end to rate cuts and the euro rose sharply versus the dollar. Gold is highly sensitive to monetary policy and resulting currency moves.
Spot gold was down 1.2 percent at $1,233.40 an ounce at 3:19 pm EST (1919 GMT), off an earlier high of $1,260.71. US gold futures for April delivery settled down 1.1 percent at $1,245.10 an ounce. The US Federal Reserve's two-day policy meeting will start on Tuesday and be watched for clues on the future pace of US rate increases.
Further US rate hikes could lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. The metal has risen 16 percent this year as expectations for further near-term hikes faded.
"The risk is that the FOMC might be a little more hawkish than people might think," said Bill O'Neill, co-founder of commodities investment firm Logic Advisors in New Jersey.
Silver was down 0.8 percent at $15.35 an ounce, while platinum was down 0.4 percent at $956.50 an ounce and palladium was down 0.7 percent at $567.65 an ounce.