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Italy's president set the country on a path to early elections on Monday, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget.
Investors fear repeat elections - which could take place as soon as August - might serve as a quasi-referendum on Italy's role in the European Union and euro zone and strengthen the country's eurosceptic parties even further.
Gold, seen as a safe have, often gains from political turmoil.
But keeping the metal's upside in check, the events in Italy pushed the dollar to a 10-month high versus the euro, making dollar-priced gold costlier for non-US investors.