Gold declined as comments by Treasury Secretary Janet Yellen on inflation raised expectations for fiscal spending, pushing Treasury yields higher.
Bullion ticked lower after Yellen said Sunday that President Joe Biden should push forward with his $4 trillion spending plans even if they trigger inflation that persists into next year, adding that a "slightly higher" interest rate environment would be a "plus." That helped boost Treasury rates, making non-interest bearing gold seem less attractive.
Gold has been hovering around $1,900 an ounce amid a debate about price pressures and speculation over whether the Federal Reserve will start talks on the idea of tapering its massive bond-buying program. Last week, gold jumped as a Labor Department report showed job gains in May fell short of economist estimates, diminishing expectations for early monetary tightening. Traders will look to Thursday's U.S. consumer-price index report for more clues on whether the central bank will be forced to curb inflation.
Stagnating prices have led to a slowdown in the revival of investor interest in gold. Hedge funds trading the Comex only marginally increased their net long exposure to the metal, according to weekly CFTC data. Exchange-traded fund holdings have been little changed in recent weeks after seeing inflows through most of May.
Spot gold declined 0.2% to $1,887.49 an ounce at 2:02 p.m. in London. Prices climbed to $1,916.64 last week, the highest intraday level since Jan. 8. Silver fell, platinum gained and palladium edged lower. The Bloomberg Dollar Spot Index declined 0.1% after dropping 0.5% on June 4.