Gold fell on Monday after polls showed the campaign for Britain to remain in the European Union regaining some momentum, sharpening appetite for assets seen as higher risk and sparking a sharp rally in stocks.
Speculation that British voters could opt to leave the trading bloc in a referendum on Thursday helped push gold to its highest in nearly two years last week, and to three-year peaks in euro and sterling terms.
However, three opinion polls ahead of Thursday's vote showed the 'Remain' camp recovering some momentum, although the overall picture remained one of an evenly split electorate. That helped pull gold back from those highs.
Spot gold was down 1.5 percent at $1,279.20 an ounce at 1130 GMT, off an earlier low of $1,277.34 an ounce, while U.S. gold futures for August delivery were down $12.80 an ounce at $1,282.00.
There have been adjustments in expectations for a potential Brexit, Capital Economics analyst Simona Gambarini said. "We had a few days at the beginning of last week when the odds of a 'Leave' vote were getting higher than a 'Remain' vote, which prompted a sharp rally in the gold price."
Now we're in a situation where we're getting a little bit more even, so you see a bit of steam coming out of the gold price," she said. We may see some more volatility, according to which side prevails.
Two weekend polls showed "In" retaking the lead and another showed the Out campaign's lead narrowing. Bookmakers' odds have shown those wishing to stay in the EU ahead and Betfair put the implied probability of a vote to "Remain" at 72 percent on Monday, up from 60-67 percent on Friday.