The Fed is expected to continue reducing its monthly bond purchase programme, denting bullion's appeal as a hedge against inflation, and to alter its forward guidance when it gives its statement later in the day. The meeting will be the first presided over by Fed Chair Janet Yellen.
Cash gold hit a high of $1,359.65 an ounce before slipping to $1,353.70 by 0704 GMT, down $1.94.
The metal rallied on Monday to a six-month top of $1,391.76 before investors started to cash in profits, pushing prices toward $1,361 on the same day and to $1,350.19 on Tuesday.
"There are subtle signs of a possible slowdown in the recovery process in the U.S., but expectations are still that the Fed will go ahead with cutting monthly bond purchases by another $10 billion," said Joyce Liu, investment analyst at Phillip Futures in Singapore.
"Whatever happens in the world, whether it's the Crimean crisis or China's bond default, they are temporary safe-haven hedges. Ultimately, the gold market will still revert to the U.S. economy. Investment demand in gold is highly driven by the state of the economy in the U.S."
U.S. gold was at $1,354 an ounce, down $5.00.
Asian share markets were mostly lower on Wednesday, with investors still observing the Ukraine/Crimea crisis and the Fed review later in the session.
Defying Ukrainian protests and Western sanctions, Russian President Vladimir Putin signed a treaty in Moscow on Tuesday making Crimea part of Russia again, but said he did not plan to seize any other regions of Ukraine.
Ukraine worries, China's first corporate bond default and fears of a slowdown in the world's No.2 economy helped gold gain 3 percent last week, but a soft yuan is now stoking worries over demand from the world's top bullion consumer.
China's yuan fell beyond 6.20 to the dollar on Wednesday for the first time since April last year amid market speculation the central bank will keep the currency weak as economic growth slows down.
With domestic gold prices in China also trading at discounts to cash gold, dealers in Hong Kong and Singapore noted a slowdown in physical demand.
"I just looked at the chart and Chinese gold prices are at discounts," said a dealer in Singapore.
"At least selling on the physical side has stopped."