Gold prices edged lower on Monday as the dollar firmed after last week's US inflation data supported the Federal Reserve's outlook for future interest rate increases. Spot gold was 0.3 percent lower at $1,248.98 an ounce as of 0644 GMT.
US gold futures for August delivery were down 0.3 percent at $1,250.20 an ounce.
The dollar strengthened against a basket of currencies and extended its gains against the yen to hit a fresh six-week high of 111.06 yen, supported by the relative strength of the US economy and on prospects of further rate hikes from the Federal Reserve. "Monetary policy re-normalization induces the strength in the dollar and with that weakening gold prices," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
The risk-aversion demand is not as significant as the impact of expected interest rate increases, To said.
US consumer prices accelerated in the year to May, with a measure of underlying inflation hitting the Federal Reserve's 2 percent target for the first time in six years, data showed on Friday.
Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.
"With the USD gaining traction as the safe-haven asset of choice amid the rising trade tensions, investor demand for gold has been soft," ANZ said in a note.
Spot gold may edge up into a narrow range of $1,254-$1,258 per ounce, before resuming its downtrend, Reuters technicals analyst Wang Tao said.