US gold futures lost ground on Tuesday but settled above a three-week low as a stronger dollar dictated direction before the US Federal Reserve's interest rate decision on Wednesday. In other precious metals, platinum rose on short covering, though it held below the two-month peak scaled overnight in Asia due to profit-taking and gold's downturn. Benchmark April gold settled down $1.20 at $422.90 an ounce on the New York Mercantile Exchange's Comex division after trading from $424.60 to $421.40 which marked its lowest intrude level since January 7.
Prices slid to the low-end of a recent range from $420 to $430 but bargain hunting and good physical demand absorbed much of the selling pressure, dealers said.
"Despite the heavy feeling in the market and generally optimistic short-term outlook for the dollar, there remains insufficient momentum at the moment to push the metal lower," said James Moore, an analyst with TheBullionDesk.com.
A stronger greenback tends to depress dollar-denominated gold because it gets costlier for overseas buyers. "Gold is having trouble rallying without the dollar losing value," said a trader at a precious metals refiner.
The euro had inched lower but held above $1.30 support. It traded near $1.3017, after the January ISM factory index eased to 56.4, near forecasts for it to decline to 57 from 58.6 in December.
Additionally, lower crude oil pressured gold by detracting from the market's appeal as a safe haven alternative. Crude oil was down 2 percent at $47.25 a barrel in the New York afternoon.
Markets widely expect the Fed to announce a quarter-point rate increase at about 2:15 pm EST (1915 GMT) on Wednesday. However, players are also interested in the language accompanying the decision for clues about how the central bank will proceed for the year.
It has so far taken a "measured" monetary tightening approach.
The Fed.'s anticipated move would lift rates to 2.5 percent and boost returns on US deposits further above those in the Euro zone, likely propping the dollar and weighing on gold. Also due this week are US jobs data on Friday and a weekend meeting of Group of Seven policymakers.
Trader Frank Abrupt with F.C. Stone in New York put support in April gold at $419-$420, with resistance at $430 the top of a three-week trading range. Spot gold last was worth $420.80/1.60 an ounce, near levels but below on Monday's New York close at $422.25/3.00.
The afternoon London fixes was $420.90. Comex March silver eased 1.7 cents to $6.73 an ounce, dealing from $6.78 to $6.68. Spot dipped to $6.70/73 from $6.72/75 previously. On Tuesday's fix was $6.70.
Nymex April platinum ended at $878.90 an ounce, up $5.10. Spot platinum reached $873.50/878.50. "You had short-covering that brought us to $881 on the am (London) fix, and there are sellers around at the $880 level," a platinum trader said.
Illiquid March palladium rose $1 to $191.40 an ounce. Spot fetched $187.50/192.50.