Gold prices retreated on Monday from a three-month peak hit in the previous session, as the dollar and U.S. bond yields edged up after a top U.S. central banker warned that the Federal Reserve was not softening its fight against inflation.
Spot gold slipped 0.5% to $1,761.86 per ounce, as of 0239 GMT, after hitting its highest since Aug. 18 on Friday. U.S. gold futures eased 0.3% to $1,764.80.
Gold prices posted their biggest weekly gain since March 2020 last week, after signs of cooling U.S. inflation lifted hopes the Fed could be less hawkish on rate hikes.
"Gold is lower in reaction to Fed's Waller pushing back on market reaction to the weakness in CPI as just one data point does not suggest inflation has been tamed," said Stephen Innes, managing partner, SPI Asset Management.
"Volatility is here to stay as make no mistake inflation remains at the fulcrum."
Fed Governor Christopher Waller said on Sunday the Fed may consider slowing the pace of rate increases at its next meeting but that should not be seen as a "softening" of its battle against inflation.
U.S. consumer sentiment fell in November, pulled down by persistent worries about inflation and higher borrowing costs, a survey showed on Friday.
Fed fund futures are now pricing in a 90% chance of a 50-basis point rate hike at the Fed's December meeting.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.
The dollar index rose 0.4% after falling to a near three-month low on Friday, making gold more expensive for other currency holders. Benchmark U.S. 10-year Treasury yields edged up from a one-month low. [USD/] [US/]
Elsewhere, silver fell 0.8% to $21.51 per ounce. Platinum eased 0.5% to $1,028.38 and palladium dipped 0.9% to $2,021.91.
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