Gold touched a one-week low on Monday as the dollar rose and investors awaited a series of U.S. data later in the week for clues on when the Federal Reserve will begin withdrawing its monetary stimulus.
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Data this week including nonfarm payrolls, third-quarter GDP and manufacturing PMI may provide more insight into the strength of the world's biggest economy.
"The market has one eye on nonfarm payrolls data later in the week, which I think is going to be the next focus," Natixis commodities analyst Nic Brown said.
"If we get better than expected employment data out of the U.S. then the spectre of Fed tapering once again looms large."
Gold investors have been concerned that strong recovery could prompt the Fed to begin cutting back its $85 billion in monthly bond purchases, which would further hurt non-interest-bearing assets such as bullion.
The U.S. central bank meets on Dec. 17-18, when it could decide the fate of its stimulus.
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Spot gold fell as much as 1.5 percent to $1,233.79 an ounce in earlier trade and was down 1.3 percent to $1,236.15 by 1449 GMT, heading for its worst daily loss in ten days. It ended November down 5.4 percent, its biggest monthly decline since June and its third consecutive month of losses.
U.S. gold futures fell 1.2 percent to $1,235.60 an ounce.
Technical support for the metal is pegged at last week's 4-1/2 month low of $1,227.34 an ounce and then at $1,200, traders said.
The dollar rose 0.2 percent against a basket of currencies, while U.S. Treasury yields were close to 2.8 percent.
Given that gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as negative for the metal.
"There is some euro/dollar weakness, which is weighing gold down," Saxo Bank senior manager Ole Hansen said. "Last week bond yields and the dollar were weak, but we didn't get enough support, and that's telling us that overall sentiment remains weak and there's not really a strong incentive to buy at the moment."
The metal has lost over a quarter of its value this year, with record outflows from gold-backed exchange-traded funds (ETFs), as signs that the U.S. economy was at least stabilising have pushed investors to shift their money to rallying equities.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell more than 450 tonnes to their lowest level since early 2009 at 843.21 tonnes this year.
"If equity markets remain firm and if prices breach $1,200, the weakness (in prices) is likely to be exacerbated," Barclays said in a note.
Physical demand has picked up at lower price levels but not to the same extent as earlier this year when a $200-an-ounce drop in two days prompted record levels of buying.
Silver fell two percent to a low since Aug.8 at $19.51 an ounce earlier. The metal posted an 8.6 percent monthly fall in November, the worst since June.
Spot platinum was down 0.4 percent to $1,351.75 an ounce, and spot palladium lost 0.5 percent to $714.75 an ounce.