Analysts said the Federal Open Market Committee appears intent to stick to its bond-buying stimulus when it releases its closely watched policy statement later on Wednesday. The Fed had already indicated it would take more than a modest show of economic strength for it to cease stimulus.

"We continue to see modest pressure on gold prices in the near term, barring any surprise announcements by the FOMC for additional monetary easing policies," said James Steel, metal analyst at HSBC.

Gold prices tend to stay volatile ahead of FOMC announcements, but physical demand from emerging markets may act as a backstop against further price drops, Steel said.

Spot gold was down 0.4 percent at $1,701.60 an ounce by 11:55 a.m. EDT, after hitting a low of $1,698.70, which marked the weakest price since September 7.

U.S. COMEX gold futures for December delivery slipped $6.30 an ounce to $1,703.10, with trading volume on track to finish slightly below its 30-day average, preliminary Reuters data showed.

Gold hit a 2012 high on October 5 at $1,795.69 on market optimism after the Fed in September unveiled a third round of mortgage-bond buybacks to stimulate economic growth.

However, bullion appeared to have lost momentum after repeatedly failing to break the psychologically important $1,800 an ounce level.

Gold, a traditional inflation hedge, has come under heavy pressure this week from worries about an economic slowdown after a raft of disappointing U.S. corporate earnings statements.

FED STATEMENT EYED

Investors awaited the outcome on Wednesday of a two-day FOMC meeting in Washington. While the Fed is not expected to add to last month's stimulus pledge, its comments will be closely watched for clues on policy direction.

Among other precious metals, silver inched down 0.1 percent at $31.64 an ounce, platinum slipped 1.1 percent to $1,551.75 an ounce, while palladium also fell 0.4 percent to $589 an ounce. Prices at 11:55 a.m. EDT.