After rallying to as high as $599 an ounce, gold futures ended lower Tuesday, as jitters took over the market ahead of the Federal Reserve's decision on interest rates

Gold for August delivery closed down $3.30 at $584.40 an ounce on the New York Mercantile Exchange.

"The mining stocks led gold downward as the market grew a bit nervous in anticipation of the Fed meeting and investors prepared for the long trading break in the U.S.," said Brien Lundin, editor of Gold Newsletter.

Other metals prices were mixed. July silver dropped 4.5 cents at $10.195 an ounce. July platinum rose $7 to $1,188.3 an ounce. September palladium edged down $6.35 to $314.20 an ounce and July copper declined 13.70 cents to $3.187 a pound.
Investors focused on Fed

The Federal Reserve is widely expected to increase interest rates on Thursday, and the meeting "is keeping the metals traders on the edge as they square positions ahead of it," said Dale Doelling, chief market technician at Trends In Commodities.

In the short term, gold is "vulnerable to bouts of long liquidation" with the Fed, the end of the month, quarter and first half on Friday, and the U.S. Independence Day holiday early next week, said James Moore of TheBullionDesk.com.

In the long term, Moore said, gold remains an attractive investment given inflation worries, high oil prices, the soaring U.S. deficit, and the continued uncertainty surrounding the nuclear ambitions of Iran and North Korea.

Elsewhere in the commodities sector, crude-oil futures hit a two-week peak Tuesday after the temporary closure of a channel in Louisiana hurt production at local refineries. Crude for August delivery closed up 12 cents at $71.92 a barrel, pulling other petroleum products higher with it.

On the currency markets, the dollar traded flat against major rivals, after posting losses yesterday and giving some strength to gold.

"If the dollar turns lower, it may just provide the spark that will allow the precious metals to gain some footing and begin to move higher," Doelling said.

On the supply side, gold inventories were unchanged at 8.03 million troy ounces, as of late Monday, according to New York Mercantile Exchange data. Silver supplies fell by 210,383 troy ounces to 102.4 million.

Copper inventories were unchanged at 7,396 short tons.

Chinese silver production will increase 28% over the next five years to 8,000 tons a year "as higher prices encourage new investment and increasing imports of lead and copper concentrates produce by-product metal," according to Investec Securities.

Chinese imports of copper in all forms for the first five months of the year declined 15% compared with 2005, said William Adams, metals analyst at BaseMetals.com.