Gold dipped almost 2 percent on Tuesday as the dollar extended gains following a raft of strong U.S. data and recent comments from Federal Reserve Chair Janet Yellen that reinforced the central bank's tightening bias on monetary policy.
U.S. gold futures for June delivery settled down $17.10 at $1,186.90 an ounce.
Spot gold dropped to a two-week low of $1,185.35 an ounce earlier and was down 1.7 percent at $1,187.
The dollar continued its strong run, up 1.2 percent against a basket of leading currencies, after data showed U.S. business investment spending plans increased solidly for a second straight month in April.
Separately, new U.S. single-family home sales rose more than expected in April and consumer confidence rose in May.
Tuesday's data added to optimism after strong inflation numbers on Friday and Fed Yellen's comments that interest rates will be raised this year as the U.S. economy was set to bounce back from an early-year slump.
A stronger dollar makes gold more expensive for holders of other currencies, while higher U.S. interest rates would dent demand for the non-interest-paying metal, increasing the opportunity cost of holding it.