By Karen Rodrigues
Spot gold was 0.1 percent lower at $1,267.23 an ounce as of 0432 GMT, while U.S. gold futures were down 0.2 percent at $1,268.80 per ounce.
"There are specific factors that will actually push the dollar higher, given the trade tensions as well as the booming U.S. economy versus other economies," said OCBC analyst Barnabas Gan.
"Gold prices are very much influenced by the dollar movement rather than anything else. It's less of a safe-haven demand into gold but rather a reaction to USD strength."
U.S. President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all imports of European Union-assembled cars.
Trump also plans to bar many Chinese companies from investing in U.S. technology firms and block additional technology exports to Beijing, Wall Street Journal reported on Sunday.
Asian shares fell on the escalating global trade tensions, while the dollar index against a basket of six major currencies stood at 94.525, having hit its highest since July 2017, at 95.529, late last week.
Gold usually gains from political and economic tensions, but has struggled this time around as the dollar has risen strongly, making the dollar-priced metal costlier for non-U.S. investors.
"The overhang of higher U.S. interest rates and dollar continues to hold relatively firm as dealers sell on rally. We need the dollar to weaken significantly to get above $1,282," said Stephen Innes, APAC trading head at OANDA.
Last week, U.S. Federal Reserve Chairman Jerome Powell said the Fed should continue with a gradual pace of interest rate hikes amid a strong economy to balance its employment and inflation goals.
Higher U.S. interest rates make gold a less attractive investment since it does not bear interest.
Gold prices hit a six-month low last week, weighed down by a firm dollar and as the Fed kept its outlook for higher interest rates.
Meanwhile, speculators trimmed their net long position in COMEX gold to the weakest in 2-1/2 years in the week to June 19, data from the U.S. Commodity Futures Trading Commission showed on Friday.
In other precious metals, silver was down 0.6 percent at $16.34 an ounce.
Platinum fell 0.2 percent to $871.49 per ounce and palladium was 0.3 percent lower at $954.10 per ounce.
(Reporting by Karen Rodrigues in Bengaluru, Editing by Sherry Jacob-Phillips and Subhranshu Sahu)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)