Gold fell on Wednesday as disappointing global manufacturing data dampened sentiment ahead of the Federal Reserve's latest policy statement which is expected to stop short of aggressive stimulus actions.
Silver and platinum, which are heavily used in industry, fell particularly hard after reports showed that a Chinese factory purchasing managers' index (PMI) fell to an eight-month low and the U.S. ISM survey of the American manufacturing sector shrank in July.
"Silver led everything down as the PMI manufacturing number that came out was negative and perceived as very much deflationary," said Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC.
Bullion was on track for a third consecutive session of losses as the precious metals market considered the prospect of additional monetary stimulus from the Fed's Open Market Committee (FOMC) meeting later on Wednesday.
Economists say the U.S. central bank will not commit to a new round of bond purchases but could well push back its guidance for when it sees the need for an eventual rate hike into 2015 from the current Fed consensus of late-2014.
Spot gold was down 0.7 percent at $1,601.44 an ounce by 11:38 a.m. EDT (1538 GMT), after briefly falling below $1,600 an ounce.
U.S. gold futures for December delivery were down $9.20 an ounce at $1,605.40, with trading volume tracking below its 30-day average, preliminary Reuters data showed.
Silver fell 2.3 percent to $27.28 an ounce. It was up more than 4 percent in a four-day rally last week.
Gold investment demand, however, is showing signs of resiliency.
Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, rose 3.32 metric tons (3.65 tons) on Tuesday, data from the fund showed. That pared back its monthly net outflow to just over 27 metric tons, which was still the biggest one-month drop in its holdings this year.
Platinum group metals were dragged down by lower-than-expected July sales for the Big Three U.S. automakers.
Platinum dropped 1.1 percent to $1,394.74 an ounce and palladium was down 0.4 percent at $583.22 an ounce.