Gold prices inched down early on Monday to drift away from a more than three-month high hit in the previous session, as the dollar firmed and Asian stocks edged up after setbacks last week.
Spot gold was down 0.1 per cent at $1,232.54 an ounce at 0055 GMT. On Friday, it had touched its highest since July 17 at $1,243.32. It had climbed 0.6 per cent last week in its fourth straight weekly gain, its longest such streak since January. US gold futures were down 0.1 per cent at $1,234.70 an ounce.
Asian shares looked set for a modest bounce on Monday, though the sentiment remains fragile as bears are on the ascendancy after steep declines across world financial markets last week. The dollar index, which measures the greenback against a basket of major currencies, was up 0.1 per cent.
Profit growth at China's industrial firms slowed for the fifth consecutive month in September as the sales of raw materials and manufactured goods further ebbed, pointing to cooling domestic demand in the world's second-biggest economy.
US Defence Secretary Jim Mattis had said on Sunday that he had met Saudi Arabia's foreign minister and called for a transparent investigation into the killing of journalist Jamal Khashoggi.
Britain's budget announcement on Monday and a “Super Thursday” at the Bank of England would normally be key moments for the world's fifth-biggest economy, but this time they are likely to be overshadowed by the drama of Brexit.
British finance minister Philip Hammond warned rebels in his Conservative Party that he would have to quickly reverse plans to ease nearly a decade of austerity if London fails to get a Brexit deal.
Chancellor Angela Merkel's junior coalition partners gave her conservatives until next year to deliver more policy results, threatening to end their alliance if there is no improvement after both parties suffered in a regional election on Sunday.
Federal Reserve officials had last week tried to ease concerns on Wall Street that bank reserves are growing scarce and that the Fed's key rate will edge up above a policy range, possibly forcing it to permanently hold more assets than planned.
Standard & Poor's had on Friday left Italy's sovereign debt rating unchanged but lowered its outlook to negative from stable, saying that the new government's policy plans were weighing on the country's growth and debt prospects.
Gold demand in India last week was muted as a recent rally in domestic prices prompted buyers to postpone purchases despite the approaching festival and wedding season. Hedge funds and money managers cut their net short position in Comex gold by 10,473 contracts to 26,899 contracts, the smallest net short position since mid-July, in the week to October 23, data showed.