Gold fell on Wednesday, extending the session's losses after the U.S. Federal Reserve signaled it was taking a meeting-by-meeting approach on when to raise interest rates for the first time since 2006.
Following a two-day meeting, the Federal Reserve pointed to weakness in the U.S. labor market and economy, a sign it is struggling with plans to raise interest rates this year.
fell to a session low of $1,201.13 after the Fed statement, and was last trading below $1,204. It had gained nearly 3 percent in the last two sessions, climbing to a three-week high of $1,215 on Tuesday.
U.S. gold futures for June delivery closed down $3.90 an ounce to $1,210 an ounce, after rising to their highest level since April 7 in the previous session.
"The market is reading that the Fed hasn't materially moved its liftoff time frame despite recent weakness in economic growth and employment,'' said Tai Wong, director of metals trading at BMO Capital Markets in New York.
"The market is reading that the Fed isn't over-emphasizing the winter slowdown and the poor March payrolls.''
While many traders had already lowered expectations for an interest rate rise in June, the Fed's statement did not rule out a September increase.
The U.S. dollar, which had fallen sharply to a two-month low, pared losses against a basket of major currencies after the Fed statement was released.
Although bullion was boosted recently after a string of U.S. data weakened the dollar and pointed to slowing momentum in the world's largest economy, data on Wednesday showed U.S. gross domestic product expanded at an annual rate of only 0.2 percent, the weakest in a year and below expectations.
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A softer dollar should boost gold, as it makes it cheaper for holders of other currencies. Traders remain cautious, however, because they expect the U.S. economy to improve and the Fed to tighten its interest rate cycle at some point, denting the appeal of gold, a non-interest bearing asset.
Recent strength in gold prices has also dampened Asian physical demand.
In China, the second biggest gold consumer, premiums eased to about $1 an ounce on Wednesday over the global benchmark, from $2 to $3 in the previous session.
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Silver was down 0.3 percent at $16.54 an ounce. Platinum was down 0.2 percent at $1,150.49 an ounce, while palladium dropped 0.5 percent to $779.75 an ounce.