A Federal Reserve board member blasted a recent Fed decision to stimulate the economy with monetary easing measures, which also pushed the yellow metal down.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.67% at USD1,755.35 a troy ounce.
Gold futures were likely to test support at USD1,740.12 a troy ounce, and resistance at USD1,777.55, Tuesday's high.
Gold prices rose earlier on reports that central banks around the world have been adding to their gold reserves.
An International Monetary Fund report revealed that central banks increased their holding of the precious metal in both July and August, with South Korea raising its gold holdings by nearly 16 tonnes in July.
South Korea has doubled its bullion reserves in the past 12 months, while Paraguay made noted increases to is reserves.
Central banks continue to stimulate their economies with monetary easing measures, which was bullish for gold as well.
Solid data out of the U.S. sent the metal falling as investors stocked up on dollar positions.
The Standard & Poor’s/Case Shiller House Price Index showed that home price in 20 cities rose 1.2% in July of this year compared with the same month a year ago.
Analysts had expected the closely watched gauge on home prices to rise 1.0% in July.
Elsewhere, the Conference Board, an industry group, reported that its consumer confidence index rose to 70.3 in September from an upwardly revised 61.3 in August.
September's reading was the highest since February and outpacing analysts' calls for a 63.0 reading.
Separately, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said earlier that a decision to roll out a third round of quantitative easing to encourage investing and hiring won't work in that households and businesses would rather pay down debts than take on new leverage.
Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing, and Plosser's critical commentary fueled some dollar demand.
Elsewhere on the Comex, silver for December delivery was up 0.24% to USD34.030 a troy ounce, while copper for December delivery fell 1.27% to USD3.711 a pound.
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