Gold falls as dollar hovers near one-month peak, Fed meet in focus

"Elevated energy prices remain an inflationary concern for Fed members, and the expected hawkish tilt by the Fed has forced interest-rate hike expectations and the U.S. dollar higher, applying pressure on the gold market," said David Meger, director of metals trading at High Ridge Futures.

Bullion has fallen about 24% since the U.S.-Israeli war with Iran began in late February, pressured by expectations that war-driven inflation could keep interest rates higher for longer.

While gold is seen as a long-term hedge against inflation, higher rates typically weigh on the non-yielding metal.

Investors now await the Fed's rate decision and Warsh's comments on Wednesday. Traders see a 71% chance of policymakers holding rates steady on Wednesday, and a 75% chance of a rate hike at the central bank's September meeting. FEDWATCH

The U.S. Personal Consumption Expenditures data for June, due on Thursday, is also expected to offer more cues on the monetary policy.