Spot gold fell 0.8% at $1,861.96 per ounce by 11:48 a.m. EST (1648 GMT). U.S. gold futures lost 0.8% to $1,861.30.
"Gold's got two things working against it, strong equities and a strong dollar at this point. It's hard for gold to continue to rally given those two markets being up higher," said Bob Haberkorn, senior market strategist at RJO Futures.
"The flight to safety in the precious metals that we had last week after the U.S. elections is gone away on the back of coronavirus vaccine news."
Denting gold's appeal, the dollar rose 0.4% to a near one-week high, making bullion more expensive for holders of other currencies.
Risk sentiment among investors gained as prospects of an effective COVID-19 vaccine overshadowed worries over surging infections.
But the breakthrough highlighted the logistical challenges of distributing hundreds of millions of doses once they become available.
"Given the reaction we've seen to vaccine news in recent days, the immediate downside risks for gold have undoubtedly increased," OANDA analyst Craig Erlam said in a note.
"The key area remains between $1,850-$1,860 and it's looking very vulnerable in the near-term." However, "the longer term prospects for gold are bullish, the road to recovery will take time and require more central bank and government support."
Federal Reserve policymakers on Tuesday highlighted the need for more targeted fiscal support from the government.
Gold, which has risen more than 22% this year, tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.
Silver eased 0.3% to $24.14 per ounce. Platinum fell 2.4% to $861.70 and palladium shed 5.2% to $2,325.58.
(Reporting by Brijesh Patel in Bengaluru; Editing by Nick Zieminski and Steve Orlofsky)
By Brijesh Patel
