Gold futures have fallen as traders move to the sidelines ahead of US Federal Reserve Chairman Ben Bernanke's testimony to Congress.
The most actively traded contract, for June delivery, on Tuesday fell $US6.50, or 0.5 per cent, to settle at $US1,377.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
Bernanke is due to testify before Congress on Wednesday ahead of the release of minutes from the Fed's most recent policy meeting.
Gold traders have spent much of the last few years watching for shifts in Federal Reserve policy. Easy-money policies like the Fed's current bond-buying program tend to draw investors to gold as a hedge against the inflation that can follow a cash-flush financial system.
Traders say the Fed's bond-buying programs have been a key support for gold prices. Worries that an improving US economy will spur the bank to roll back its stimulus have limited investor demand for gold this year.
"There are a lot of people still thinking that (the Fed) will start to tap on the breaks," said Stephen Platt, a market strategist with Archer Financial Services.
"That gives them a little bit negative attitude toward precious metals."
Gold cut its earlier losses near midday Tuesday, briefly pushing toward unchanged after James Bullard, the president of the Federal Reserve Bank of St Louis, said in a speech that the central bank should press forward with its bond-buying program, but be willing to change its size depending on economic events.
Gold also was pressured on Tuesday by another decline in the amount of gold held by exchange-traded funds. The ETFs' hoard fell by almost 10 metric tons Monday, to 2,142 tons, according to UBS.
Investors in such funds have consistently cashed out this year, as many money managers shifted cash to equities or other assets that have outpaced gold this year.
The flow of gold out of the funds, which have seen about 15 per cent of their holdings sold onto the physical market this year, has weighed on prices, analysts and traders say.
Gold futures had climbed Monday, as investors rushed to close out bets on lower prices after a seven-day losing streak and Moody's Investors Service renewed its warning that US policy makers must address the country's debt level.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,360.75; Previous PM $1,354.75
Jun gold $1,377.60, down $6.50; Range $1,358.00-$1,399.90
Jul silver $22.455, down 12.7 cents; Range $22.015-$22.910
Jul platinum $1,458.40, down $26.20; Range $1,446.10-$1,494.50
Jun palladium $748.10, down $2.65 ; Range $735.75-$749.90