Spot gold was down 0.38 percent at $1,312.95 per ounce as of 1:48 p.m. ET, having dipped to its lowest level since Jan. 29 at $1,308.20 earlier in the session.
U.S. gold futures settled $2.80 lower at $1,319.30 per ounce.
"U.S. securities and bonds are yielding so much more than the rest of the globe, so global investment is coming to the U.S. ... The dollar is in demand with gold taking a backseat," said George Gero, managing director at RBC Wealth Management.
Gold traders were in a "wait and see" mode with uncertainties surrounding Chinese demand, Beijing's trade spat with the Washington and Brexit, he added.
Higher Treasury yields can translate into more demand for the dollar since the currency is used to buy bonds, a traditional safe haven, thereby eroding bullion's appeal as a safe store of value.
"We're likely to be in a trading range to see whether there will profit-taking in stocks, selling of Venezuelan gold, and whether there will be a hard or soft Brexit," Gero added.
Abu Dhabi investment firm Noor Capital said it bought 3 tonnes of gold on Jan. 21 from Venezuela's central bank, at a time when President Nicolas Maduro is seeking to keep his crisis-hit government solvent.
The U.S. dollar was broadly stronger against a basket of currencies as investors took heart from Friday's strong U.S. payroll number, while world stock markets held near two-month highs.
With much of Asia closed by holidays this week, the greenback was also supported by positive sentiment surrounding recently concluded U.S.-China trade talks.
"At the moment, it seems there is no urgency for investors to cash in some of their equity holdings and head for safe-haven investments like gold and bonds," Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, said in a note.
Overall risk sentiment was also buoyed by the U.S. Federal Reserve's decision to be "patient" on future interest rate hikes.
On the technical front, "upside resistance for gold would be at $1,330 and then at $1,338, with support coming in around $1,311.50," said Daniel Pavilonis, senior market strategist at RJO Futures.
Reflecting investor sentiment, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.8 percent to 817.40 tonnes on Friday.
Among other precious metals, palladium gained 0.78 percent to $1,361 per ounce.
Silver fell 0.45 percent at $15.84 and platinum dipped 0.49 percent to $817.50