Gold has fallen to the lowest price in more than a month, as the start of a week-long holiday in major consumer China kept potential buyers at bay.
The most actively traded contract, for April delivery, on Monday fell $US17.80, or 1.1 per cent, to settle at $US1,649.10 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since the January 7 settle of $US1,646.30.
Gold has slipped for three consecutive sessions and is down 1.6 per cent in 2013.
Upbeat economic data, particularly from the US and China and a cooling of concern about Europe's debt crisis have limited demand for the metal. Some investors buy gold as a haven from economic turmoil, and that appetite has waned as US equities ran to multiyear highs on stronger confidence in global growth.
"It seems a lot of investors who have been positioned with risk in mind, with European banking crisis in mind, with a slowdown in Japan and China in mind, are rethinking that strategy," said James Cordier, a principal and founder of Liberty Trading Group in Tampa, Florida.
Gold also has come under pressure from worries that the US Federal Reserve would pull the plug on its easy-money efforts before the end of 2013.
Accommodative monetary policies, including the Fed's current bond-buying program, tend to support gold prices as investors seek a hedge against a potential loss of value in paper currency.
On Monday, many Asian markets were closed for the holidays, leaving major gold-trading hubs in Hong Kong, Singapore and Tokyo quiet.
Chinese markets will remain closed through the week for festivities related to the lunar new year, which "could limit physical buying interest," Kitco Metals analyst Jim Wyckoff said in a note.
China is the No 2 consumer of the metal, behind India.
Selling in the futures market accellerated early on Monday, as prices dipped further below a closely watched indicator of market momentum.
The market's retreat below the 200-day moving average, which stood around $US1,670, triggered automatic sell orders causing some investors to bet that prices were pointed lower still, traders said.
Also weighing on the market was the pending cut in the amount of collateral required to trade gold and silver, George Gero, a vice president and precious-metals strategist with RBC Capital Markets, said in a note.
CME Group Inc (CME), the operator of the Comex, said last week that it would reduce collateral requirements for its benchmark gold futures by 10 per cent and silver by 13 per cent, effective at the close of business on Tuesday.