"We're expecting it to be a bit sticky between $457 and $459," Julia Hamblett, trader with Dresdner Kleinwort Wasserstein, said. "Below there I think you do start getting a few people who are a bit more worried and you could see it quite quickly down to $445."
Spot gold was quoted at $459.40/460.10 a troy ounce by 1457 GMT, down sharply from $464.80/465.60 last quoted in New York on Monday but off its earlier low point of $458.20.
The dollar extended gains as investors awaited a near-certain, 12th straight rise in US interest rates later in the New York session. The Fed was widely expected to announce an increase in interest rates, to 4 percent from 3.75 percent, at 1915 GMT.
Other traders said a lack of physical demand from India, the world's biggest gold consumer, at a time when it traditionally buys more during the festival period, was also weighing on sentiment.
It was a similar story in Europe. "As far as Europe is concerned, we had a period with extremely good offtake, but in the last couple of weeks it's been pretty dead," one trader said.
But other traders felt physical demand would be quick to reappear if prices fell through $457. Although gold has dropped by over four percent in value since hitting a near 18-year high of $480.25 last month, the metal's longer-term prospects remained positive, analysts said.
"Even if we see a short term sell-off, the solid bedrock of physical demand should rule out any substantial decline and lay the basis for a significant investor led rally," Natexis Metals said in a monthly report.
"This may not prove sufficiently strong to see $500 gold this year but sustained prices in the $480s looks eminently possible, generating a full year average of $445."
Other metals were also dragged lower in the sell-off. Platinum fell to $918/923 from $936/940 in New York, while palladium was at $218/222 versus $222/226. Silver was at $7.42/7.45 an ounce versus $7.52/7.55.