By Peter Hobson
The stronger dollar dampens demand for gold by making it costlier for buyers holding other currencies, while geopolitical uncertainty fuels interest in bullion as a safe investment.
Spot gold was up 0.2 percent at $1,281.12 an ounce at 1043 GMT, while U.S. gold futures for August delivery were 0.4 percent higher at $1,283.60 an ounce.
The dollar was stable near its strongest since November against a basket of currencies.
Gold plunged 1.8 percent on Friday, its biggest one-day fall since November 2016, as Washington decided to enact tariffs on $50 billion in Chinese goods, Beijing pledged to respond in kind and the dollar rocketed higher.
"We had a flush-out on Friday and the market is trying to work out whether these new prices are justified or not," said Saxo Bank analyst Ole Hansen.
Gold would remain sensitive to trade dispute headlines and the possibility that a showdown over immigration between German Chancellor Angela Merkel and her conservative allies the Christian Social Union could escalate, Hansen said.
"The market is also ignoring the political risks in Germany," said analysts at Commerzbank. "A lack of consensus on refugee policy could even cause a split in the government."
On the technical side, Fibonacci support for gold was at $1,267.10, with resistance at $1,301.40, analysts at ScotiaMocatta said.
They added that as long as gold continued to trade below its 200-day moving average at $1,307 prices were more likely to fall than rise.
Reuters technical analyst Wang Tao said gold could break support at $1,277 an ounce and fall towards $1,258-$1,268.
Bets by finds on higher gold prices on the Comex exchange had risen in the week to June 12, supporting prices, but Friday's rout may have forced some to liquidate their positions.
Holdings of gold by exchange traded funds (ETFs) tracked by Reuters meanwhile were stable after falling by 1.4 million ounces, or 2.4 percent, since late May.
In other precious metals, silver was up 0.5 percent at $16.59 an ounce after falling 3.6 percent on Friday.
Platinum was 0.2 percent lower at $886.10 an ounce and palladium was up 0.1 percent at $986.97 an ounce.
(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Edmund Blair)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)