Higher rates could dent demand for assets that do not pay interest, such as gold, and boost the dollar, which was trading at its highest in more than 11 years against a basket of major currencies.
"I don't expect prices to fall below $1,150 as opportunistic buying would come in at that level," ING Bank senior strategist Hamza Khan said.
"The Fed has been so evasive in nailing down a date for an interest rate hike that until we actually see some concrete plans we are going to be trading within the $1,150 to $1,250 range."
A strong U.S. currency makes dollar-denominated assets such as gold more expensive for holders of other currencies, often reducing demand.
The metal was also under pressure from firmer European shares, which bounced back after the previous session's sell-off.
The drop in gold to multi-month lows has attracted some bargain hunters in Asia, the top bullion-consuming region, traders said.
In China, the metal was traded at a premium of about $5 an ounce to the London global benchmark, an indication of good buying interest.
Sustained physical buying could provide a floor for falling prices.
Weakness in gold spread to other precious metals, with platinum taking the biggest hit. Prices slumped to their lowest since July 2009 at $1,119.50 an ounce.
Silver was up 0.8 percent at $15.64 an ounce, having dropped to a two-month low on Tuesday, and palladium was down 0.3 percent at $798.95 an ounce.