As of 01:11 GMT, spot gold prices fell 0.4 percent to $5,020.10 per ounce, after rising 2.5 percent in the previous session.

The dollar index rose on Monday, making dollar-denominated gold more expensive for holders of other currencies.

The Labor Department said on Friday that the U.S. consumer price index rose 0.2 percent in January, below economists' expectations of a 0.3 percent increase, following an unrevised 0.3 percent rise in December. Lower inflation typically boosts the likelihood of interest rate cuts.

Gold, which yields no return, typically rises in a low-interest-rate environment.

As for other precious metals, spot silver prices fell 0.6 percent to $76.92 per ounce, after climbing three percent on Friday.

Meanwhile, oil transactions were tepid on Monday ahead of talks between the United States and Iran, as ongoing concerns over tensions between the two countries continued to disrupt oil flow and keep prices supported, while the OPEC+ group is expected to resume production increases starting in April.

Brent crude futures fell 3 cents to $67.72 a barrel by 01:56 GMT, after closing up 23 cents on Friday.

Both benchmarks recorded a weekly decline last week, with Brent falling about 0.5 percent and WTI losing one percent, after U.S. President Donald Trump said on Thursday that Washington might reach an agreement with Iran within the next month, prompting a drop in prices that day.

The two countries renewed negotiations earlier this month, aiming to reach an agreement in their prolonged dispute over Tehran's nuclear program and avoid a new military confrontation, with a second round of talks scheduled in Geneva tomorrow, Tuesday.

Reports on Sunday quoted an Iranian diplomat saying that Tehran is seeking a nuclear agreement with the U.S. that provides economic benefits to both parties, including investments in energy and mining, as well as discussions on aircraft purchases.

Market analyst at IG, Tony Sycamore, said: “With both sides expected to stick to their core red lines, expectations for an agreement are low, and this calm is likely before the storm.”

U.S. officials told Reuters that the United States has deployed a second aircraft carrier to the region and is preparing for the possibility of a sustained military campaign if talks fail.

With prices supported by U.S.-Iran tensions, Reuters reported that the OPEC+ group of oil producers is likely to resume production increases from April, following a three-month halt, to meet peak summer demand.

Sycamore said, “The market responded quite well to those reports.”