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V11 update

For new functions it is enough to use documented Interactive option:

URLRead["https://httpbin.org/status/401", Interactive -> False]

Broken for URLDownload so here's a workaround:

Authentication dialog for URLDownload / URLSave

###Pre V11 era, URLFetch and friends solutions

There is an undocumented option DisplayProxyDialog which prevents that:

URLFetch[
    "https://httpbin.org/status/401"
  , "StatusCode"
  , "DisplayProxyDialog" -> False
]

As OP noticed it works for URLRead even though it does not appear in Options[URLRead] in contrary to Options[URLFetch].

When switched off you can handle 401 status code however you like, abort, prompt custom dialog etc.

I have not guessed it, WRI Support suggested it to my friend when he asked:

[...] Just informed by our development group that there is such an option (all-be-it undocumented):

 

"DisplayProxyDialog" -> False

 

to omit the authentication dialog. [...]

So I suppose this makes it safe to use.

V11 update

For new functions it is enough to use documented Interactive option:

URLRead["https://httpbin.org/status/401", Interactive -> False]

Broken for URLDownload so here's a workaround:

Authentication dialog for URLDownload / URLSave

Pre V11 era, URLFetch and friends solutions

There is an undocumented option DisplayProxyDialog which prevents that:

URLFetch[
    "https://httpbin.org/status/401"
  , "StatusCode"
  , "DisplayProxyDialog" -> False
]

As OP noticed it works for URLRead even though it does not appear in Options[URLRead] in contrary to Options[URLFetch].

When switched off you can handle 401 status code however you like, abort, prompt custom dialog etc.

I have not guessed it, WRI Support suggested it to my friend when he asked:

[...] Just informed by our development group that there is such an option (all-be-it undocumented):

"DisplayProxyDialog" -> False

to omit the authentication dialog. [...]

So I suppose this makes it safe to use.

V11 update

For new functions it is enough to use documented Interactive option:

URLRead["https://httpbin.org/status/401", Interactive -> False]

###Pre V11 era, URLFetch and friends solutions

There is an undocumented option DisplayProxyDialog which prevents that:

URLFetch[
    "https://httpbin.org/status/401"
  , "StatusCode"
  , "DisplayProxyDialog" -> False
]

As OP noticed it works for URLRead even though it does not appear in Options[URLRead] in contrary to Options[URLFetch].

When switched off you can handle 401 status code however you like, abort, prompt custom dialog etc.

I have not guessed it, WRI Support suggested it to my friend when he asked:

[...] Just informed by our development group that there is such an option (all-be-it undocumented):

"DisplayProxyDialog" -> False

to omit the authentication dialog. [...]

So I suppose this makes it safe to use.

V11 update

For new functions it is enough to use documented Interactive option:

URLRead["https://httpbin.org/status/401", Interactive -> False]

Broken for URLDownload so here's a workaround:

Authentication dialog for URLDownload / URLSave

###Pre V11 era, URLFetch and friends solutions

There is an undocumented option DisplayProxyDialog which prevents that:

URLFetch[
    "https://httpbin.org/status/401"
  , "StatusCode"
  , "DisplayProxyDialog" -> False
]

As OP noticed it works for URLRead even though it does not appear in Options[URLRead] in contrary to Options[URLFetch].

When switched off you can handle 401 status code however you like, abort, prompt custom dialog etc.

I have not guessed it, WRI Support suggested it to my friend when he asked:

[...] Just informed by our development group that there is such an option (all-be-it undocumented):

"DisplayProxyDialog" -> False

to omit the authentication dialog. [...]

So I suppose this makes it safe to use.

There is an undocumented option which prevents that, set

"DisplayProxyDialog" -> False

As OP noticed it works for URLRead even though it does not appear in Options[URLRead] in contrary to Options[URLFetch].

When switched off you can handle 403 status code however you like, abort, prompt custom dialog etc.

I have not guessed it, WRI Support suggested it to my friend when he asked:

[...] Just informed by our development group that there is such an option (all-be-it undocumented):

"DisplayProxyDialog" -> False

to omit the authentication dialog. [...]

So I suppose this makes it safe to use.

V11 update

For new functions it is enough to use documented Interactive option:

URLRead["https://httpbin.org/status/401", Interactive -> False]

###Pre V11 era, URLFetch and friends solutions

There is an undocumented option DisplayProxyDialog which prevents that:

URLFetch[
    "https://httpbin.org/status/401"
  , "StatusCode"
  , "DisplayProxyDialog" -> False
]

As OP noticed it works for URLRead even though it does not appear in Options[URLRead] in contrary to Options[URLFetch].

When switched off you can handle 401 status code however you like, abort, prompt custom dialog etc.

I have not guessed it, WRI Support suggested it to my friend when he asked:

[...] Just informed by our development group that there is such an option (all-be-it undocumented):

"DisplayProxyDialog" -> False

to omit the authentication dialog. [...]

So I suppose this makes it safe to use.