Gold prices fell to a nearly three-week low in thin trade on Monday, as sharp outflows from the world's biggest bullion-backed exchange-traded fund (ETF) and no further escalation of geopolitical tensions prompted selling.
Palladium slid about 2.5 percent on follow-through weakness after South Africa's biggest platinum producers last week offered to raise wages for miners in a bid to end a widespread mining strike for platinum group metals.
In Ukraine, an agreement reached last week to avert wider conflict was faltering as the new week began, with pro-Moscow separatist gunmen showing no sign of surrendering government buildings they have seized. However, no new violence was reported Monday.
"Some of the problems have subsided over the conflict between Russia and Ukraine. The climax of tensions is probably behind us at least for now," said Phillip Streible, senior commodities broker at RJ O'Brien in Chicago.
Spot gold was down 0.6 percent to $1,285.90 an ounce by 10:47 a.m. EDT (1447 GMT), having earlier hit $1,281.40, the lowest price since April 2.
U.S. COMEX gold futures for June delivery were down $7.60 at $1,285.80 an ounce. Trading volume was on track to finish below its 30-day average, preliminary Reuters data showed.
The London market was shut on Monday for a Bank Holiday, while U.S. traders returned to their desks after the Good Friday holiday. In addition, Australia, Hong Kong and London are closed on Monday for the Easter holiday.
Analysts said that some investors in gold have been spooked by significant outflows from gold ETF holdings last week.
SPDR Gold Trust, the world's top gold ETF and a good measure of investor sentiment, saw outflows of 9.3 tonnes.
Before last week, the fund - closely watched due to the size of its holdings - had gained 6.2 tonnes from the beginning of 2014.
Last year, huge outflows from the fund were partly responsible for the 28 percent drop in gold's price. Investors shifted money to better-performing equities as the U.S. Federal Reserve began to unwind its monetary stimulus.
In physical market news, China has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, in a move that would help keep purchases discreet at a time when it might be boosting official reserves.
In gold mining industry news, sources told Reuters that talks between Barrick Gold Corp and Newmont Mining Corp over a combination that would create a gold mining behemoth have hit a snag, but the companies remain keen