Gold prices dropped on Monday, pressured by thin trading volumes as US and China markets remained shut due to local public holidays, while some traders booked profits after last session's 2.5% jump.
Spot gold fell 1.1% to $4,986.32 per ounce by 0550 GMT. US gold futures for April delivery lost 0.8% to $5,005.60 per ounce.
"Gold has given back some of Friday's post-CPI gains today due to thinner trading conditions and a lack of fresh upside catalysts," said Tim Waterer, KCM chief analyst, referring to the US consumer price inflation data. He also pointed to profit-taking on the day.
US markets are closed for the Presidents' Day holiday, while markets in China are closed for the Lunar New Year holiday. The US CPI rose 0.2% in January after an unrevised 0.3% gain in December, the Labor Department's Bureau of Labor Statistics said on Friday.
Economists polled by Reuters had forecast the CPI to increase by 0.3%. Federal Reserve Bank of Chicago President Austan Goolsbee said on Friday that interest rates could go down, but noted that services inflation remained high.
Market participants anticipate the central bank to hold interest rates at its next meeting on March 18. Still, they are pricing in 75 basis points in rate cuts this year, with the first expected in July, according to data compiled by LSEG.
Non-yielding bullion tends to do well in low-interest-rate environments. "It will likely require the dollar to resume its downtrend for gold to make a push in the direction of $6,000 before year-end," Waterer said.
On the geopolitical front, the US military is preparing for the possibility of a weeks-long operation against Iran should President Donald Trump authorize an attack, two US officials told Reuters, in what could become a far more serious conflict than previously seen between the countries.
Spot silver lost 2.4% to $75.64 per ounce, after a 3% fall earlier in the session. The white metal rose 3.4% on Friday. Spot platinum slipped 0.8% to $2,045.11 per ounce, while palladium shed 0.7% to $1,673.52.
