Gold settled lower on Tuesday as the dollar edged up and investors started to factor in expectations the Federal Reserve will maintain monetary stimulus, much of which is already priced into the market.
The Fed begins a two-day policy meeting on Tuesday in which it is widely expected to confirm it will continue buying bonds at the rate of $85 billion a month.
Many economists say the Fed could push tapering to early next year.
Spot gold was dropped 0.4 percent to $1,346 an ounce. It hit its highest since Sept. 20 at $1,361.60 in the previous session, supported by weaker-than-expected U.S. data that reinforced the view that the economy is not yet strong enough for the Fed to start tapering stimulus.
(Read more: US Sept retail sales get iPhone boost; demand soft)
for December delivery settled $6.70 lower at $1,345.50 an ounce.
"We are treading water... waiting for the FOMC meeting and what Bernanke says tomorrow night about a timetable for tapering,'' Societe Generale analyst Robin Bhar said.
The dollar gained 0.5 percent against a basket of currencies after data suggested U.S domestic consumer spending grew modestly in September after factoring out a hefty drop in car sales.
(Read more: Consumer confidence lower than expected in October)
Gold prices have fallen nearly 20 percent this year in the expectation of imminent tapering by the Fed, but a budget battle in Washington and a string of weak economic data have raised questions over whether it will scale back monetary stimulus, giving bullion a boost.
The metal has gained 8 percent over the past two weeks.
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