"I don't think that's wholly priced in (to gold). It does have the potential to have an impact," he said. "I don't see why we can't go below $1,300 before the end of the year."
Central bankers from around the world will gather from Aug. 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Chair Janet Yellen due to speak the following day.
The dollar rose against the yen and euro on Monday as traders reassessed expectations for Fed action on rates after policymakers' comments last week.
Speculators cut their bullish positions in COMEX gold contracts in the week to Aug. 16, but remains near the record high touched early last month.
"Sizable long positions plus technical vulnerability, the strength in the dollar and then the hawkish news - all of that is working against gold," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.
If prices fall below Monday's low, the market could see further liquidation, Tesfaye said.
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, reported an outflow of 4.5 tonnes last week, adding to the near 20-tonne drop in its holdings the previous week.
Silver hit a seven-week low of $18.77 an ounce and was later down 2.09 percent at $18.89. Platinum was down 0.92 percent at $1,100.25, after falling to its lowest in nearly a month. Palladium was 2.49 percent lower at $690.35.