Gold rose to a near 7-year peak of $1,610 last week after a U.S. drone strike killed a top Iranian commander in Baghdad and Iran launched missiles against U.S. bases in Iraq in retaliation.
The rally, however, faded with a lack of further military escalation in the region.
The United States imposed more sanctions on Iran on Friday and vowed to tighten the economic screws if Tehran continued "terrorist" acts or pursued a nuclear bomb.
On the technical front, gold found support at level of $1,546.50 before retracing back to $1556.
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