"Gold is under pressure form the dollar index rallying significantly and interest rates continuing to rise," said Phillip Streible, senior commodities strategist at RJO Futures. "I wouldn't be surprised to see gold hold the 50-day moving average at $1,316."
Spot gold shed 1.3 percent at $1,328.71 an ounce by 1:35 pm EST (1835 GMT), dropping to $1,328.26, its lowest since February 14. US gold futures futures for April delivery settled down $25, or 1.8 percent, at $1,331.20 per ounce.
Spot gold is expected to fall to the next support level at $1,326, according to Reuters technical analyst Wang Tao. Geopolitical uncertainty, ranging from disunity at the recent Munich security conference to threatened US trade sanctions, may increase safe-haven demand for gold, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Gold investors are also anticipating the release on Wednesday of the US Federal Reserve's January policy meeting minutes and the Thursday release of the European Central Bank's latest policy meeting minutes. Meanwhile, silver slipped 1.2 percent to $16.46 an ounce, hitting $16.44, its lowest since February 14.
Palladium added 0.1 percent at $1,033.99 an ounce, after rising to the highest since February 2 at $1,050 in the previous session. Platinum dropped 0.2 percent to $1,000.20 an ounce after rising to a three-week high of $1,013.60 on Monday.