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The U.S. dollar fell versus the yen as traders took profits from the greenback's recent rally against the Japanese currency.

Expectations of a dovish Fed also hurt the dollar. Asian stocks retreated as investors were wary of riskier assets ahead of the central bank meetings.

Spot gold eased 0.3 percent to $1,234.16 per ounce by 0653 GMT, after gaining 0.3 percent earlier in the session.

"The metal continues to be influenced to a large extent by dollar movements," said HSBC analyst James Steel, adding that he expects gold to reach $1,300 this year.

"As well as a weaker dollar, we see global risks and a modest recovery in oil prices as gold-bullish. The more tame Fed tightening cycle, compared to expectations last year, should also support gold," Steel said.

The Fed also holds a policy meeting this week, with the two-day gathering kicking off on Tuesday. The U.S. central bank is not expected to raise interest rates at the meeting, but markets will be looking for its take on the global economy and its monetary policy outlook.

Analysts at FXStreet noted “The metal has an immediate resistance at 1244.56 (1h 100-SMA) and1250 (psychological levels). Meanwhile, the support stands at 1227 (previous lows) below which doors could open for 1200 (psychological levels).”

Reference: Reuters, FXStreet