 "Gold eases but still near four-month high on safe-haven bids")
Spot gold fell 0.2% to $1,334.89 an ounce by 0301 GMT after posting its sixth straight weekly gain last week.
The metal had hit $1,345, its highest since March, on Thursday after worries about the financial stability of Portugal's largest listed bank Banco Espirito Santo hammered equities and stoked fears of an European banking crisis.
"The Portugal fears have subsided as markets don't think it is going to be another widespread crisis," said one trader in Tokyo.
"However, the safe-haven demand for gold is still there due to the tensions in the Middle East. Portugal was only one reason for safe-haven bids, the geopolitical situation has not changed," the trader said.
Israel appeared to hold off on a threatened escalation of its week-old Gaza Strip barrage on Monday despite balking at Western calls for a ceasefire with an equally defiant Hamas.
On Sunday, the Israeli military had warned residents of the northern border town of Beit Lahiya to leave or risk their lives when, after nightfall, it planned to intensify air strikes against suspected Palestinian rocket sites among civilian homes.
Elsewhere, Russia threatened Ukraine on Sunday with "irreversible consequences" after a man was killed by a shell fired across the border from Ukraine, an incident Moscow described in warlike terms as aggression that must be met with a response.
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Gold is seen as an alternative investment to riskier assets at times of geopolitical and financial uncertainties.
Data from the Commodity Futures Trading Commission showed that hedge funds and money managers increased their bullish bets on gold and silver futures and options in the week to July 8, underscoring the metal's safe-haven appeal.
For this week, markets are eyeing Federal Reserve Chair Janet Yellen's congressional testimony for clues about the U.S. economy and the timing of expected U.S. central bank interest rate hikes.
Investors are also eyeing physical buying in Asia, which has been subdued due to the recent price gains.
"There isn't much demand from India, China or anywhere in Southeast Asia for the last few weeks," said a dealer in Singapore. "Unless prices drop sharply in a short period of time, I don't think we can expect any price support from the physical markets."