SINGAPORE — Gold dropped for a third consecutive session on Tuesday to its lowest in almost two weeks, with investors focused on closely watched policy meetings of the US and Japanese central banks.

A rise in global equity markets over the past few days has provided challenges to the gold market which has gained about 16% this year.

Asian stock markets were tentative on Tuesday as they braced for policy announcements, with all eyes on the Bank of Japan’s (BoJ’s) meeting later in the day after it stunned markets in January by adopting negative rates.

Spot gold lost 0.6% to 1,227.20/oz by 2.31am GMT while US gold slid 1.3% to $1,228.40/oz. Spot gold earlier in the session fell to $1,225.70/oz, its lowest since March 2.

"We are waiting for the outcome of the Fed meeting and data coming from the US is showing that the state of the economy is not bad," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers.

"I think there are too many long positions in the market. They are taking some profit."

Most investors expect the BoJ to hold policy steady as governor Haruhiko Kuroda has said he hoped to spend more time assessing the effect on the economy of the central bank’s negative interest rate policy.

The US Federal Reserve’s two-day policy meeting will start on Tuesday and be watched for clues on the future pace of US rate increases.

Further US rate hikes could lift the opportunity cost of holding nonyielding bullion, while boosting the dollar, in which it is priced. The metal has risen 16% this year as the expectation for further near-term hikes faded.

The weak move in gold over the past two sessions followed Friday’s brief bounce to a 13-month high after the European Central Bank (ECB) signalled an end to rate cuts and the euro rose sharply versus the dollar. Gold is highly sensitive to monetary policy and resulting currency moves.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.08% to 790.14 tonnes on Monday from 798.77 tonnes on Friday. In terms of ounces, holdings fell to 25,403,927 ounces from 25,681,155.

Hedge funds and money managers increased their bullish Comex gold position to the highest in 13 months in the week to March 8, the eighth increase in the past nine weeks, data showed on Friday.