Gold for August delivery was last down $3.60 at $648.30 an ounce on the New York Mercantile Exchange. The metal dropped more than $16 on Monday.
Other metals prices were mixed. Silver was down 13 cents at $10.97 an ounce and copper added 0.6 cent at $3.605 a pound. Platinum declined $14 at $1,236 an ounce and palladium dropped $6.20 at $316 an ounce.

"After halting its decline at the $640 mark, gold rebounded to $650 in the wake of news that attacks in Beirut are intensifying and that Israel has set cease-fire conditions which are likely to be met with Hezbollah's refusal," said Jon Nadler, an analyst at Kitco.com.
British Prime Minister Tony Blair and U.N. Secretary-General Kofi Annan have called for an international force to be sent to Lebanon to halt the fighting, but the U.S. and Israel have expressed skepticism about the proposal.
"The trend [for gold] remains upward, but the damage wrought yesterday as rumors of peace and talk of cease-fire ran rampant was material," said Dennis Gartman of The Gartman Letter.
The markets are also looking forward to Federal Reserve Chairman Ben Bernanke's semiannual report on monetary policy to the Senate Banking Committee on Wednesday.
"With the dollar still firm ahead of tomorrow's address by Fed Chairman Bernanke, gold is likely to remain pressured and looks set to spend more time in the $610-$655 area," Moore said. He added, however, that tensions in the Middle East could generate further gold price hikes.
Kitco.com's Nadler said that Bernanke might testify that stagflation is plaguing the American economy.
"Regardless of the causes, stagflation is an undesirable set of conditions to have," Nadler said. "It is, however, an environment in which gold normally (and historically) makes forward progress."
On the supply side, copper inventories were down 282 short tons as of late Monday, according to Nymex data. Silver supplies rose by 595,295 troy ounces to 102.7 million.