Gold fell 1 percent on Tuesday, snapping a four-day winning streak, weighed down by better U.S. consumer spending data and after top market India hiked its import duty on gold to a record 10 percent.
Bullion came under pressure after a report by the Commerce Department showed U.S. consumer spending rose in July at its fastest pace in seven months, an encouraging sign that could strengthen the case for the Federal Reserve winding down its economic stimulus program.
The metal extended loses as the dollar rose to a one-week high against both the euro and the yen on the U.S. retail data.
"The story right now is the stronger dollar, and the huge increase of import duties by the Reserve Bank of India (RBI) is likely to weigh on physical demand," said Howard Wen, metal analyst at HSBC.
India raised import taxes on gold and silver on Tuesday as policymakers scrambled to narrow a gaping current account deficit. It marked the third such increase in eight months.
Spot gold fell 1 percent to $1,322.40.
U.S. gold futures for December delivery settled down $13.70 at $1,320.50 an ounce, with trading volume about 20 percent below its 30-day average, preliminary Reuters data showed.
(Read more: Pro: Three reasons gold will hit $1,600 by year-end)
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