Gold traded mixed on Tuesday as most investors stayed on the sidelines ahead of a U.S. Federal Reserve meeting that should provide signals on the pace of monetary tightening.
The Fed is widely expected to raise interest rates when it concludes its meeting on Wednesday, although investors will focus on any new hints on the pace of hikes this year and its assessment of the economy and inflation.
"Obviously ahead of the meeting people aren't building significant positions ... If anything, they're expecting a dovish Fed because recent (U.S.) economic data has been weak," said Fawad Razaqzada, analyst at FOREX.com.
A lower-than-expected pace of rate hikes would weigh on the dollar, making dollar-priced gold cheaper for non-U.S. investors.
Spot gold gained 0.21 percent to $1,267.31 per ounce, after hitting a session low of $1,261.30, its weakest since June 2.
U.S. gold futures for August delivery settled 30 cents lower at $1,268.60.
The U.S. dollar slipped ahead of the Fed meeting, with investors also awaiting details from the Fed on its plans to shrink $4.5 trillion dollars of assets it amassed to nurse the economic recovery.