On Monday after posting its biggest weekly drop since June, investors weighed monetary policy tightening in the US against Russia's war in Ukraine.
The metal fell 3.4 per cent last week as the Federal ReserveFederal Reserve raised interest rates for the first time since 2018. There was a move towards policy tightening to curb the hottest inflation in 40 years, according to officials.
Interest rates typically weigh on non-interest bearing gold. Traders are weighing mixed messages on the war.
Ukraine rejected a Russian demand to surrender the embattled port city of Mariupol, and an adviser to the Ukrainian president said Russian forces are using more destructive artillery. The conflict has aided the gold asset from accelerating inflation and slowing growth.
The main driver that's still supporting to trade higher in the medium term is the stagflation risk, according to Kelvin Wong, an analyst at CMC in Singapore. The Fed has so far failed to keep pace with future inflationary expectations.