Gold hovered near one-year lows on Wednesday, little-changed after the Federal Reserve announced they would leave interest rates unchanged for now.
Still, analysts anticipate another two rate hikes this year, and pressure from a stronger dollar kept gold lower.
Spot gold fell 0.47 percent to $1,217.67 per ounce. It hit a one-year low of $1,211.08 on July 19. U.S. gold futures for December delivery settled down $6 at $1,227.60.
The Federal Open Market Committee voted unanimously to keep the target range for its benchmark rate at 1.75 percent to 2 percent, noting that its policy stance remains "accommodative" and said inflation continues to progress near the Fed's 2 percent goal.
But multiple Fed officials, including Chairman Jerome Powell, have sent indications that two more interest rate hikes are coming before the end of the year.
"The most important thing that gold is that it's looking at two rate increases this year which is adding pressure on gold, making the scenario weak for bullion," said ActivTrades chief analyst Carlo Alberto De Casa, who said bullion remained in a bearish trend.
A key support area in the short term is around $1,211-$1,215 per ounce, De Casa said, with gold having failed to rise above $1,235.
The central bank also upgraded its assessment of the U.S. economy on Wednesday, noting that "economic activity has been rising at a strong rate."
The U.S. dollar, in which gold is priced, rose against a basket of leading currencies after a source familiar with the Trump administration's plans said the White House was about to propose higher tariffs on $200 billion in Chinese imports.
Gold, which is usually used as a hedge against risk, bounced on the news on Tuesday to $1,228 but lost steam as the dollar advanced.
"The trade tensions are also fuelling safe-haven flows into the dollar. The U.S. currency still appears to be the preferred safe haven rather than gold," OCBC analyst Barnabas Gan said.
"Bullion is falling every time the US Dollar is strengthening, but its unable to recover when the greenback loses ground, confirming that there's little investor appetite for gold in this phase," ActivTrades' De Casa said.
Meanwhile, trade tensions also pushed world stocks lower as investors feared a trade war between Washington and Beijing could hit global growth.
Hedge funds and money managers increased their net short position in COMEX gold contracts to a record in the week to July 24, U.S. Commodity Futures Trading Commission data showed on Friday.
In other precious metals, silver declined 1.06 percent to $15.35. Platinum lost 2.37 percent to $814.70 and palladium slipped 1.14 percent to $918.90.