Prices have fallen sharply after breaking through $1,285 an ounce on Tuesday, the lower limit of a range they had kept to for much of the previous month. They hit a low of $1,240.69 an ounce earlier on Monday, their weakest since late January.
Spot gold was down 0.3 percent at $1,247.10 an ounce at 1127 GMT, while U.S. gold futures for August delivery were up $1.00 an ounce at $1,247.00.
The ECB is tipped to announce a package of policy options after its meeting on Thursday, following heavy hints that monetary policy will be loosened in a variety of ways to support growth.
The following day sees the release of monthly U.S. non-farm payrolls data, a leading barometer of the health of the world's largest economy. Both events will be closely watched by gold traders for their impact on currencies and U.S. monetary policy.
"There are two forces in control - fast money pulling prices lower, and the market looking to price in a more dovish ECB and a strong non-farm payrolls number," Societe Generale analyst Robin Bhar said. "If the ECB goes through with its measures and U.S. data is consensus beating, I still think it's doom and gloom for gold."
Looser monetary policy, which cuts the opportunity cost of holding non-yielding gold, is generally positive for bullion prices. However, this will likely be outweighed by the currency impact of a weaker euro, Bhar said.
"A more dovish ECB might be bullish for gold in euros, but people still look at gold in dollars," he added. "If the dollar continues to be bid... it can only apply more pressure on gold."
Reassuring Chinese factory data and another record high for Wall Street lifted world stocks on Monday, diverting interest from gold. European shares started the month positively, rising 0.2 percent.
PHYSICAL DEMAND SOFT
Physical buying failed to pick up as consumers expect gold prices to fall even further. In top buyer China, banks are also adequately stocked from last year's record imports, leaving them to focus on selling existing stocks first.
"On the physical side, the trade remained largely anaemic, with few changes to near flat Shanghai Gold Exchange premiums to (spot prices) last month," VTB Capital said in a note.
"Notably, volumes on the SGE 999 gold contract tumbled to near one-month lows at the end of last week, with little sign of Chinese bargain hunting at current levels."
Key physical markets in Hong Kong and China were shut on Monday for a public holiday.
In No.2 consumer India, premiums almost halved last week on hopes the new government would ease restrictions on imports of the precious metal.
Other data also showed that hedge funds and money managers cut their bullish bets in U.S. gold futures and options in the latest week to their lowest level in nearly four months, another sign of waning investor interest in the metal amid higher equities.
Among other precious metals, silver was up 0.4 percent at $18.76 an ounce, recovering from Friday's 11-month low at $18.60. Spot platinum was down 0.7 percent at $1,434.74 an ounce, while spot palladium was down 0.2 percent at $831 an ounce.
Platinum group metals continued to take support from a long-running miners' strike in major producer South Africa. The strike, which began on Jan. 23, has hit 40 percent of global platinum production.