Gold slipped to its lowest level in over two weeks early on Monday amid a firmer dollar, while prospects of monetary policy tightening in the United States ahead of the Federal Reserve's two-day meeting starting on Tuesday also weighed on the metal.

Spot gold was down 0.2 per cent at $1,316.50 an ounce by 0052 GMT, after falling earlier to $1,315.10, its lowest level since August 31. US gold futures for December delivery fell 0.4 per cent to $1,320.60 an ounce.

Asian shares crept ahead and the dollar firmed on Monday in a cautious start to a week in which the US Federal Reserve is likely to wrestle with its bloated balance sheet as part of a long reversal of super-cheap money worldwide.

The dollar held firm near a seven-week high against the yen on Monday, supported by recent rises in US Treasury yields. Sterling held firm after rallying last week, underpinned by expectations the Bank of England could raise interest rates soon.

Bank of England policy rates

A Bank of England policymaker, who had been its strongest advocate of ultra-low borrowing costs, said rates might need to rise in the coming months.

US Ambassador to the United Nations Nikki Haley had said on Sunday the UN Security Council has run out of options on containing North Korea's nuclear programme and the United States may have to turn the matter over to the Pentagon.

US retail sales

US retail sales unexpectedly fell in August and industrial output recorded its biggest drop since 2009 as Hurricane Harvey disrupted activity, suggesting the storm could dent economic growth in the third quarter.

Euro zone wages grew at their fastest rate in two years in the second quarter, data released on Friday showed, increasing the chances that the European Central Bank will set out plans next month to rein in its economic stimulus.

The Russian Central Bank had lowered its main interest rate to 8.5 per cent from 9 per cent on Friday and said it expected to deliver more cuts in the next six months as inflation slows.