Gold climbed on Monday as the U.S. dollar slipped after Lawrence Summers withdrew from the race to be the next chairman of the Federal Reserve, but the metal was still trading near its five-week low on concerns over the outlook for the bank's stimulus.
Spot gold rose 0.2 percent to $1,328.85 an ounce by 0020 GMT, after recording its largest weekly loss since late June. Poor technical momentum, easing tensions with Syria and expectations that the U.S. central bank would unwind its monetary stimulus sent the metal to a five-week low on Friday.
Summers, a former top aide to President Barack Obama and Treasury secretary under President Bill Clinton, withdrew from consideration to succeed Fed Chairman Ben Bernanke, after liberal pressure soured his confirmation prospects.
Investors wagered that Fed policy would stay easier for longer under the other main candidate, Janet Yellen.
Markets are awaiting the outlook from the U.S. central bank on its $85 billion monthly bond purchases. The Fed holds a two-day policy meeting from Tuesday.
The United States agreed to call off military action against Syria under a deal with Russia to remove President Bashar al-Assad's chemical weapons stockpile.
Hedge funds and money managers slashed bullish bets in futures and options of the U.S. gold markets for the first time in 5 weeks, pressured by easing tensions over Syria and expectations that the Federal Reserve will begin to unwind its monetary stimulus, a weekly report by the Commodity Futures Trading Commission showed on Friday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.66 percent to 911.12 tonnes on Friday.
After a once-in-a-generation plunge in the bullion price left investors nursing their wounds, gold equities - long unloved - showed the biggest two-month net inflow for two years in July and August.
The U.S. dollar fell to a near four-week low against a basket of major currencies and Asian shares rallied after Summers pulled out from the race to be the next Fed chief.