Spot gold was steady at $1,808.92 per ounce by 0721 GMT. US gold futures were little changed at $1,809.50.
“There are technical indications that the US dollar could strengthen and that might be why we are seeing traders in the gold market taking the lid off the price at the moment,” said Michael McCarthy, chief strategist at CMC Markets.
“There’s no doubt that we are in the medium-term uptrend for gold. It appears that there’s a segment of the investment community that remains unconvinced about the V shaped recovery, and they’re buying gold.”
The dollar index rose 0.2% against its rivals, making gold more expensive for holders of other currencies.
Coronavirus cases continue to surge in the United States, adding to concerns over the recovery of the global economy from the effects of the pandemic, which has so far infected more than 14 million people worldwide.
Underscoring the impact of the virus, Japan’s exports plunged 26.2% in June from a year earlier, Ministry of Finance data showed on Monday.
Markets are eyeing the European Union Summit for trading cues, with leaders at an impasse over carving up a proposed 750 billion euro ($858.30 billion) recovery fund to revive economies.
“Gold markets are also becoming addicted to large stimulus measures from central banks to provide excess liquidity and which have been driving expectations,” Phillip Futures analysts said in a note.
“Central banks may disappoint gold investors if the bankers perceive signs of inflation or economic progress.”
Speculators reduced their bullish positions in COMEX gold and increased them in silver contracts in the week to July 14.
Palladium dropped 0.7% to $2,008.01 per ounce, while platinum fell 0.1% to $836.91 and silver was almost unchanged at $19.32.