Gold settled higher on Tuesday, but many investors remained on the sidelines ahead of central banks meetings this week in Europe and the United States and support from the physical market softened while major buyer China was on holiday.
Volumes are likely to thin on Wednesday when many European players are out for the Labor Day holiday as well, traders said.
Gold last dropped 0.2 percent to about $1,472 per ounce. It had gained nearly 1 percent on Monday on expectations the U.S. Federal Reserve would keep the pace of its bond buying unchanged at $85 billion a month following weaker-than-expected U.S. growth.
U.S. gold futures settled $4.70 higher at $1,472.10 an ounce.
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"The FOMC and ECB meetings are the focal events this week. But what we are seeing now is that price strength seen in the past few days is running out of steam, while investors are sitting on the fence ahead of the policy meetings," Saxo Bank senior manager Ole Hansen said.
Investors positioned for an interest rate cut by the European Central Bank and for the Fed's Federal Open Market Committee to extend monetary stimulus measures, but traders said that the outcome for both was uncertain.
Accommodative policy is generally seen as supportive for gold, because printing of money tends to be inflationary.
The Fed is currently buying longer-dated U.S. Treasuries and mortgage-backed bonds every month and is expected to vote to keep doing so at the conclusion of a two-day policy-setting meeting on Wednesday.
In other markets, the dollar reversed earlier gains against the euro after a U.S. Midwest business barometer unexpectedly contracted in April, adding to worries about the U.S. recovery.
SPDR Poised for Record Decline
Other data this week include non-farm payrolls on Friday.
"It is a wait-and-see week, with Chinese holidays, FOMC meetings and non-farm payrolls," said David Govett, head of precious metals at broker Marex Spectron.
Gold prices sank to $1,321.35 on April 16, their lowest in more than two years, after a drop below $1,500 led to a further sell-off that stunned investors and prompted them to keep slashing holdings of exchange-traded funds.
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The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.22 percent to 1,080.64 tonnes on Monday, their lowest since September 2009.
The fund's holdings were set for a record monthly decline of 11.5 percent.
In the physical market, buying subsided as China, the world's second-largest gold consumer after India, was on holiday until Thursday for Labour Day celebrations.
Supply of gold bars, coins and nuggets in Asia remained tight, however, with premiums for gold bars in Hong Kong reaching their highest level since October 2011, up to $3 an ounce to spot London prices this week.
Silver fell 1.5 percent to about $24 an ounce.
Platinum gave up earlier gains to trade down 0.2 percent to $1,502 an ounce, having reached a two-week high of $1,522 on Monday. Palladium was down 0.1 percent to nearly $696 per ounce, having hit a two-week high of $700.72 earlier.
On the supply side, third largest miner Lonmin shut down its Number Two furnace for 30-40 days following an undisclosed incident.
Anglo American Platinum said it would next week reveal the outcome of talks with the government and unions about restructuring plans, in which it could cut up to 14,000 jobs and mothball two mines in South Africa.