Gold fell more than 3% to below $4,800 an ounce on Monday, extending losses from the previous session, after the precious metal recorded its biggest drop in more than a decade.
Friday's sharp decline came after reports that U.S. President Donald Trump intends to nominate Kevin Warsh, seen as a more hawkish choice, to head the Federal Reserve.
Profit-taking also emerged after a strong rally that pushed gold to record highs. This surge was fueled by strong demand from central banks and what is known as the debasement trade, where investors shifted to physical assets instead of currencies and bonds amid growing concerns about rising government debt.
Geopolitical and economic tensions, coupled with concerns about the Federal Reserve's independence, have boosted gold's appeal as a safe haven. Momentum buying further amplified the gains, with a surge of purchases by Chinese speculators adding excessive momentum to the rally and contributing to the subsequent sharp decline.