Gold slipped on Monday, reversing early gains as growing conviction the U.S. Federal Reserve would decide to roll back its stimulus from this month dented the metal's appeal as a hedge against inflation.
The consensus is that the Fed will initially reduce its bond purchases, now $85 billion a month, by $10 billion or perhaps $15 billion and will announce the taper to its quantitative easing (QE) after its September 17-18 meeting.
Spot gold, which posted its steepest weekly drop in more than two months last week, had slipped 0.1 percent to $1,324.61 an ounce by 0650 GMT after hitting an intraday high of $1,334.46. Silver fell nearly 2 percent.
News that former Treasury Secretary Lawrence Summers had dropped out of the race to head the Fed boosted bullion prices briefly as he is seen as more hawkish than the other main contender Janet Yellen. Markets however do not expect this to derail the near-term tapering process.
"Yellen is perceived to be more dovish than Summers," said Barnabas Gan, an analyst at OCBC Bank in Singapore. "It seems that there may be more resistance in faster tapering of the QE program if Yellen becomes the chairman," Gan said.