On Tuesday gold prices plunged below the $1,200-level, as the appeal of the precious metal was undermined by a stronger dollar.
On the New York Mercantile Exchange, gold futures for August delivery hit an intraday low of $1,195.20 a troy ounce, a level not seen since May 13, before trading at $1,196.70 during European morning hours, $8.20, or 0.68%.
On Monday, gold prices gained 40 cents, or 0.03%, to close at $1,205.30 as trade volumes were light with U.K. and German markets closed for a bank holiday and markets in the U.S. shut for the Memorial Day holiday.
Silver futures for July delivery were 21.4 cents lower, or 1.26%, to trade at $16.83 a troy ounce, the lowest level since May 13.
The greenback was higher after Fed Chairwoman Janet Yellen said on Friday that the central bank still expects to start lifting interest rates this year if the economy continues to improve as expected.
"Transitory factors", including a severe winter, were the reasons for economic slowdown, according to Yellen, who also reiterated that the timing of an initial rate hike would be data dependent.
The greenback was also supported after data showed that underlying inflation in the U.S. rose for a third month in April.
A strengthening dollar weakens the appeal of gold, which is denominated in dollars, for holders of other currencies.
Later in the day, markets await U.S. data on durable goods orders later Tuesday for a fresh indication on the strength of the economy.
