Gold settled more than 2 percent lower on Tuesday, hit by technical selling below its key 200-day moving average and as investors cashed in after its sharp rally on hopes that the Federal Reserve would not raise interest rates any time soon.
Selling accelerated sharply after gold prices broke through their 200-day moving average at $1,300 an ounce, a key level where many investors had placed their stop-loss orders.
U.S. gold futures for June delivery settled 2.1 percent lower at $1,300.30 an ounce, logging its biggest one-day drop since since December 19.
Earlier, spot gold hit a low of $1,290.34 an ounce. It was last down 1.8 percent at $1,302 an ounce.
Traders said the yellow metal's recent short-covering rally, after the Fed's March meeting minutes last week showed officials were not keen on increasing interest rates straight after unwinding bond purchases, was susceptible to a sell-off.