Gold fell 1 percent on Wednesday as the dollar and stocks gained, though tensions over North Korea and upcoming French and UK elections underpinned demand in the safe-haven asset.
The Fed released the Beige Book on Wednesday, noting that economic activity increased at a modest pace.
"The dollar is down and European equity markets are also down which moves against gold because it's a safe-haven asset," said Carsten Menke, an analyst at Julius Baer, adding that the market was also beginning to discount President Trump's influence on U.S. policy.
A stronger greenback makes dollar-denominated assets such as gold more expensive for holders of other currencies and higher appetite for risk boosts stocks and puts pressure on bullion.
A run of disappointing U.S. economic data and doubts the Trump administration will progress with tax cuts have quelled expectations of faster inflation.