Gold prices fell 1% on Tuesday, retreating from a one-month high hit earlier in the session as risk sentiment improved on wider market optimism that the coronavirus pandemic may be easing.
Spot gold was down 0.3% at $1,657.50 per ounce by 0852 GMT, after rising to a one-month high of $1,671.40. The metal had risen as much as 2.8% on Monday.
"Risk appetite is back in the markets as new infections are declining, that's weighing on gold prices. Also higher yields are negative for gold," said Quantitative Commodity Research analyst Peter Fertig.
"However, some investors fear that monetary policy would lead to inflation. For them, buying gold at these levels remains attractive."
"Gold investors are revelling in the level of central bank stimulus and fiscal spending, especially when it raises government debt levels," said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.
Indicative of sentiment, the holdings of world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5% to 984.26 tonnes on Monday - its highest in over three years.