Gold fell for a third session on Wednesday, with the dollar and European shares steadying as the market focus cautiously shifted from political tensions in Ukraine to a policy decision by the Federal Reserve later in the day.
The U.S. central bank is expected to reduce its monthly bond purchase programme for a third time in a row, and to provide guidance on when it might eventually raise interest rates.
"The move down for gold has started at the beginning of the week and one reason is that clearly the Crimean crisis is being priced out, resulting in some risk appetite among market players," Commerzbank commodity analyst Daniel Briesemann said.
"On the other side, really low inflation and positive economic data for February published in the U.S. is also weighing on the gold price," he added. "The U.S. Fed meeting is clearly something market players are focusing their attention on."
Spot gold slipped 0.7 percent to $1,346.10 an ounce by 1031 GMT. The metal rallied on Monday to a six-month high of $1,391.76 before investors started to cash in profits.
U.S. gold futures fell one percent to $1,346.00 an ounce.
European shares were flat on Wednesday, with investors still observing the Ukraine/Crimea crisis and awaiting Janet Yellen's inaugural policy review as Federal Reserve chief.
The dollar was up 0.1 percent versus a basket of currencies, while 10-year U.S. Treasury yields steadied just below 2.7 percent.
Returns from U.S. bonds are closely watched by the gold market, given that the metal pays no interest.
Gold has risen 12 percent this year, after a 28-percent drop in 2013, and was headed for its biggest quarterly gain for at least 6-1/2 years as mounting geopolitical tensions and fears over slowing economic growth spurred demand for the metal as an insurance against risk.
Defying Ukrainian protests and Western sanctions, Russian President Vladimir Putin signed a treaty in Moscow on Tuesday making Crimea part of Russia again, but said he did not plan to seize any other regions of Ukraine.
However, the situation in the region remained volatile. Ukraine's acting Defence Minister Ihor Tenyukh Ukrainian said his country's forces will not withdraw from Crimea, raising concerns of an armed conflict.
Ukraine worries, China's first corporate bond default and fears of a slowdown in the world's No.2 economy helped gold gain 3 percent last week, but a soft yuan is now stoking worries over physical demand from the world's top bullion consumer.
Joyce Liu, investment analyst at Phillip Futures in Singapore, said hedging against risk in response to events such as the Crimean crisis or China's bond default were only temporary safe-haven moves.
"Ultimately, the gold market will still revert to the U.S. economy. Investment demand in gold is highly driven by the state of the economy in the U.S.," she said.
With domestic gold prices in China trading at discounts to cash gold, dealers in Hong Kong and Singapore noted a slowdown in physical demand.
In other precious metals, silver was down 0.2 percent to $21.72 an ounce.
Platinum was up 0.3 percent at $1,454.24 an ounce, while palladium rose 0.1 percent to $765.80 an ounce.