Gold settled about 1 percent lower on Tuesday as investors took profits from the previous session's rally to near four-month highs after President Vladimir Putin said Russia would only use military force in Ukraine as a last resort.
Bullion's drop came as U.S. equities measured by the S&P 500 index surged more than 1 percent to a record high after Putin ordered troops involved in a military exercise near the Ukrainian border back to their bases as he sought to ease tensions.
Prices of safe-haven U.S. Treasury debt also fell following Monday's gain after escalating military tension between Russia and the West over Ukraine hammered Russian financial markets.
U.S. gold futures for April delivery settled 0.9 percent lower at $1,337.90 an ounce, its worst daily loss since late January.
Spot gold was last down 1 percent at $1,337 an ounce.
Lingering economic uncertainty related to worries over Ukraine, however, should underpin gold prices, analysts said.
"We are seeing some profit-taking," said Eugen Weinberg, head of commodities research at Commerzbank.
(Read more: Latest Ukraine news and market reaction)