Gold prices slipped on Monday as the dollar gained on stronger-than-expected U.S. manufacturing data and investors awaited jobs data later this week for clues about whether U.S. interest rates would rise by the year-end.
Spot gold <XAU=> reversed gains to fall 0.3 percent to $1,311.54 an ounce by 3:03 p.m. EDT (1903 GMT), with volumes muted as China markets were closed for the National Day holidays from Oct. 1-9.
U.S. gold futures <GCcv1> settled down 0.3 percent at $1,312.70 per ounce.
"Prices are slowly drifting lower ... but they will not come down too much, particularly ahead of Friday," said Societe Generale analyst Robin Bhar.
Analysts will look to the U.S. non-farm payrolls report on Friday for more clarity on whether the U.S. Federal Reserve is on track to tighten credit by December.
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar and making commodities more expensive for non-U.S. buyers.
The dollar <.DXY> strengthened against a basket of currencies.
"This week ... there are plenty of U.S. macro data to look forward to which could have a big impact on the near-term direction of the dollar, and in turn buck-denominated precious metals," said Fawad Razaqzada, technical analyst for Forex.com.
"So while they appear to be out of favour now, gold and silver could make a comeback if the incoming U.S. data, especially the nonfarm payrolls report on Friday, turn out to be mostly weaker than expected."
Sterling gold prices rose after the pound dropped to three-year lows versus the euro, and neared three-decade lows against the dollar. This prompted some British buyers of physical metal to cash in gains after British Prime Minister Theresa May set a March deadline for the formal departure process from the European Union to begin.
"We're seeing some selling back, because obviously sterling has collapsed a bit, which has pushed the gold price up in sterling terms, which has seen people taking a profit and selling rather than buying," one London-based gold dealer said.
Also weighing on gold were reports that Deutsche Bank was negotiating a reduced settlement with the U.S. Department of Justice, which boosted risk appetite among investors.
Silver <XAG=> fell 2.2 percent to $18.72 an ounce, platinum <XPT=> slipped 1.7 percent to $1,006.20, and palladium <XPD=> was down 1.4 percent at $709.75.
(Additional reporting by Jan Harvey in London and Nallur Sethuraman and Swati Verma in Bengaluru; Editing by Alexander Smith and Richard Chang)