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Bullion has been under pressure since the Fed last week released the minutes of its April meeting, which showed officials believe the U.S. economy could be ready for another interest rate increase next month.

Echoing those sentiments, Eric Rosengren, president of the Federal Reserve Bank of Boston said on Friday that conditions for a rate increase are "on the verge of broadly being met".

"We see gold continuing to work lower over the course of the coming week, as an upward trending dollar should continue to weigh in on prices," said INTL FCStone analyst Edward Meir.

Some market analysts believe that investors are still betting on a not-so-soon increase in U.S. interest rates, reflected in the continued support for gold-backed exchange traded funds.

"The Fed is unlikely to raise interest rates anytime soon since it is an election year. Maybe after elections, unless we have very strong U.S. economic data," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Gold speculator and large futures traders slightly edged their gold bullish positions higher last week marking the eighth rise out of the last nine weeks, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Comex gold futures, traded by large speculators and hedge funds, totaled a net position of +266,288 contracts in the data reported through May 17th. This was a weekly change of +1,390 contracts from the previous week’s total of +264,898 net contracts that was registered on May 10th.

Reference: Reuters, Invseting