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Gold fell to its lowest in nearly three weeks on Tuesday, losing 1.5 percent after encouraging U.S. economic data showing the trade gap narrowed and more indications the Federal Reserve could withdraw its monetary stimulus as early as next month.
Bullion's failure to hold above $1,300 an ounce earlier in the day triggered technical selling, traders said.
Gold was under pressure after Monday's international trade data showed the U.S. economy likely grew faster than initially reported in the second quarter, thanks to a sharp narrowing in the trade deficit to its lowest in more than 3-1/2 years in June as exports touched a record high and imports fell.
Also weighing on gold was uncertainty over the time frame of the Fed's planned reduction of its bond purchases to stimulate the economy known as quantitative easing.
Spot gold fell as much as 1.9 percent to its lowest since July 18 at $1,279.24 an ounce earlier. It was last down 1.6 percent to $1,283.
U.S. gold futures for December settled $19.90 lower at $1,282.50 an ounce.
(Read More: Is the love lost for gold returning?)
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