Gold prices fell more than 1 percent on Monday, the biggest one-day drop since late January, as a sharp rally in U.S. equities triggered profit-taking after bullion briefly rose to a six-month high earlier in the day.
Wall Street, as measured by the benchmark S&P 500 index , rose about 1 percent as East-West tensions over Crimea eased after many in the region voted to join Russia and the referendum passed without violence.
Analysts said even though gold may extend gains in the short term on geopolitical tensions and worries about China's economic slowdown, the yellow metal is due for a pullback after recent gains.
"Correction potential is building up, which would come into play if the Crimean crisis were to ease," said Eugen Weinberg, head of commodity research at Commerzbank.
Last week, gold posted a 3 percent gain, its sixth consecutive weekly gain, after Russia reiterated its threat to invade other parts of Ukraine, showing no sign of heeding Western pleas to back off from a Cold War-style confrontation.
Spot gold was down 1.2 percent at $1,365 an ounce by 3:35 p.m. EDT (1935 GMT), having earlier hit its highest since Sept. 9 at $1,391.76.
U.S. COMEX gold futures settled down $6.10 at $1,372.90 an ounce, with trading volume on track to finish in line with its 30-day average, preliminary Reuters data showed.
Gold's losses were limited after the United States and the European Union imposed sanctions, including asset freezes and travel bans, on a small group of officials from Russia and Ukraine after the weekend referendum.
Technical selling and renewed liquidation by hedge funds could also limit the precious metal's gain, analysts said.
Gold's recent rally to six-month highs may spark a further jump to levels last seen in the second half of 2013, but fresh highs could be followed by a slide back to three-year lows, technical analysts said.
Traders now await the Federal Reserve's policy meeting on Tuesday and Wednesday. The U.S. central bank is expected to announce another $10 billion cut to its bond-buying stimulus.
New money has been flowing into gold-backed exchange-traded funds (ETFs) as investors seek safety from riskier assets during times of uncertainty. Holdings in SPDR Gold Trust, the world's largest gold-backed ETF, rose 3.29 tonnes to 816.59 tonnes on Friday.
Among other precious metals, silver fell 1.4 percent to $21.13 an ounce. Platinum edged down 0.1 percent to $1,460.50 an ounce, while palladium rose 0.4 percent to $769.25 an ounce.