Gold fell to its lowest level in nearly four weeks as dollar and bond yields rebounded before the Fed's key meeting.

Yields on 10-year treasury bonds, which hit a three-month low last Thursday, stabilized after rising to 1.49 per cent on Monday, dampening the attractiveness of non-yielding gold. Investors are keeping a close eye on the Fed meeting, which is scheduled to begin on Tuesday, hoping to find a time signal to reduce the size of emergency stimulus measures.

Gold prices have fallen from their highest level since January, set earlier this month, along with investors' assessment of inflationary pressures and the Fed's policy path. Current market expectations are that the Fed will not signal bond purchases until August or September, according to a Bloomberg survey of economists.

Spot gold fell 0.2 per cent to $1861.68 an ounce. Gold fell to $1844.92 an ounce on Monday, its lowest intraday level since May 17. Silver, platinum and palladium also fell. The Bloomberg dollar spot exchange rate index rose slightly.