Gold wiped out the previous day's gains in Europe on Wednesday afternoon as prices came under pressure after currency markets digested Tuesday's comments from the Federal Reserve on monetary tightening.
Spot gold fell as low as $403.75, having fallen away from the previous day's 20-day high above $409. By 1445 GMT, gold traded at $405.70/406.40 per troy ounce, down from $409.15/409.90 last quoted in New York on Tuesday.
Gold kicked off the day on a positive note, with traders noting good buying by one investment bank, as the dollar struggled after the US Fed raised interest rates but indicated little rush for more aggressive hikes.
But currency markets subsequently reconsidered the statement and concluded that a rate tightening cycle was still under way, bumping gold down to the day's low - where it bounced modestly.
"There have been a few large chunks of selling today and it (gold) sort of gave up the ghost," one trader said.
He thought gold could still make another move higher and noted good two-way business throughout the European session.
Analysts said gold was looking well bid, but further dollar weakness was needed to ignite more gains.
The metal remained some $22 off the 15-year peak scored in early January just above $430.
"Before we get too excited about this rally, it is important to look at the picture for euro/dollar. Until the $1.2500 level is definitively broken, the euro remains stuck in a range and... a weaker dollar is needed to propel gold higher," John Reade of UBS Investment Bank said in a report.
The euro was trading at $1.2235/39 by 1451 GMT, off its earlier high at $1.2331.
Silver followed gold lower to $6.27/$6.30 from New York's late quote on Tuesday at $6.35/6.38.
Platinum dropped back to $840.00/845.00 from $846.00/851.00 quoted in New York late on Tuesday and well off an earlier two-week high of $852 scored during Asian trade.
Palladium stagnated during the day and was last quoted unchanged at $205.00/210.00 previously.