Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as traders weighed a potential rate hike.

The most active gold contract for April delivery fell 9.4 U.S. dollars, or 0.77 percent, to settle at 1,216.10 dollars per ounce.

Investors spent the trading day focused on what is believed to be an impending Federal Reserve rate hike. They now believe the Fed may raise rates from 0.75 to 1.00 during the March FOMC meeting.

According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 84 percent at the March meeting and 78 percent for the May meeting, along with a 7 percent chance of an increase to a 1.0 rate.

The U.S. dollar also put pressure on the precious metal as the U.S. Dollar Index rose by 0.11 percent to 101.82 as of 1843 GMT. The index is a measure of the dollar against a basket of major currencies.

Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

The U.S. Dow Jones Industrial Average fell by 17.22 points, or 0.08 percent as of 1846 GMT. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

A report released by the U.S. Department of Commerce on Tuesday showed the trade deficit increasing to negative 48.5 billion U.S. dollars during the month of January.

Analysts note that despite this sharp increase in the deficit, the figure is in line with expectations and analysts believe that it was unlikely to make a large impact on the movement of gold.

Traders are looking to the rest of the week for the Automated Data Processing employment report on Wednesday, weekly jobless claims report on Thursday, and the big jobs report on Friday.

Silver for April delivery dropped 23.7 cents, or 1.33 percent, to close at 17.536 dollars per ounce. Platinum for April delivery fell 17.1 dollars, or 1.75 percent, to close at 961.10 dollars per ounce.