By Eric Onstad
Spot gold was down 0.02 percent at $1,297.69 per ounce at 1225 GMT, while U.S. gold futures for August delivery were 0.04 percent lower at $1,302.20 per ounce.
The U.S. Federal Reserve will likely raise its target interest rate to above the rate of inflation for the first time in a decade this week, seeking to sustain the second-longest U.S. expansion on record while continuing to edge rates higher.
"Everybody's on the sidelines, waiting for the outcome of the Fed meeting. There's a tug of war on views on what kind of message the Fed will put out," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
"My personal view is that the Fed will surprise with a hawkish mode, which will see a spike in the dollar and produce a brief but deep sell-off of precious metals."
That would open up an opportunity for investors to go long in gold since a seasonal rally is expected over the summer, Torlizzi added.
The dollar index, which measures the greenback against a basket of six major currencies, rose 0.1 percent. [USD/]
Also weighing on gold was encouraging signs from U.S. President Donald Trump about a summit with North Korean leader Kim Jong Un in Singapore, dimming gold's safe haven attraction.
Trump said Tuesday's summit could "work out very nicely" as officials from both countries met to narrow differences on how to end a nuclear stand-off on the Korean peninsula.
"The market opened predictably quiet ahead of the abundance of risk events this week and wholly ignored President Trump going rogue at the G7," Stephen Innes, APAC trading head at OANDA said, adding that with geopolitical risk moderating, it will be the Fed and ECB that will guide gold's near-term fate.
U.S. President Donald Trump threw the G7's efforts to show a united front into disarray at the weekend.
In additional to the Fed's decision due on Wednesday, the European Central Bank (ECB) and Bank of Japan also have policy meetings this week.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 828.76 tonnes on Friday, the lowest since February 22.
In other precious metals, silver gained 0.6 percent to $16.84 an ounce, after hitting a seven-week high of $16.93 earlier in the session.
Palladium dropped 0.2 percent to $1,012.65 an ounce, while platinum climbed 0.7 percent to $907.50 an ounce. It touched a one-week high of $910.50 earlier in the session.
Platinum group metals, used for catalytic converters in vehicles, were supported by data showing Chinese automobile sales in May were up 9.6 percent from a year earlier.
"The good figures helped ensure that palladium remains firmly above the $1,000 per troy ounce mark," Commerzbank said in a note.
(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Adrian Croft and Jason Neely)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)