Gold prices dropped as much as 1.4% amid a firmer US dollar and reduced demand for traditional safe-haven assets.
The dollar strengthened after reports that Japan may adjust its debt levels, a development that also contributed to a rise in global bond yields.
Market participants are closely watching developments in US-EU trade discussions and awaiting upcoming US inflation data for fresh direction.
Even with the recent pullback, gold remains up strongly year-to-date—by more than 25%—and some near-term technical outlooks point to a potential recovery toward $3,500 per ounce.