The precious metal hit a low of $1248.80 an ounce, while currently trading around $1250.32 from the opening at $1250.39.
Gold posted its sharpest weekly fall in two months last week, as Federal Reserve minutes for April’s meeting signaled policymakers could raise interest rates next month if the economy continued to improve.
The yellow metal posted its third straight weekly drop the previous week amid improvement in U.S. economic data and hawkish comments from Fed officials.
Economic conditions for a rate hike are “on the verge of broadly being met,” Eric Rosengren, President of the Federal Reserve Bank of Boston, said on Friday.
Gold is very sensitive to interest rate movements, especially by the Fed, since the yellow metal provides no interest to its holders and thereby benefits from the low interest rate environment.
The dollar to a two-month high of 95.50 last week, according to the dollar index, thereby denting the appeal of the metal as an alternative investment.
Meanwhile, the dollar index, which tracks the green currency’s movements against a basket of major currencies, is trading around 95.30.
The euro eased some of its gains after a report showing business activity slowed down in May, according to the PMI flash reading released Monday.
Later in the day, Federal Reserve Bank of St. Louis President James Bullard will speak about the US economy and monetary policy at the Official Monetary and Financial Institution Forum in Beijing.
A report from the U.S. due later in the day may signal a widening expansion to 51.0 in May from 50.8 in April.
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