By Frank Tang and Clara Denina
NEW YORK/LONDON (Reuters) - Gold fell more than 1 percent on Wednesday, extending the previous session's losses after comments by Russian President Vladimir Putin eased tensions in Ukraine, with the market turning its focus on a policy decision by the Federal Reserve.
Bullion has now fallen sharply for a third consecutive day, as losses accelerated after Putin signed a treaty on Tuesday making Crimea part of Russia again but said he did not plan to seize any other regions of Ukraine.
"The move down for gold has started at the beginning of the week and one reason is that clearly the Crimean crisis is being priced out, resulting in some risk appetite among market players," Commerzbank commodity analyst Daniel Briesemann said.
Briesemann said that low inflation data and overall positive U.S. economic data in February also pressured gold prices.
Some market participants sold out of caution ahead of a Fed policy statement to be released later on Wednesday, traders said.
The U.S. central bank is expected to reduce its monthly bond purchase stimulus for a third time in a row, and to provide guidance on when it might eventually raise interest rates.
Spot gold slipped 1.2 percent to $1,338.95 an ounce by 11:38 a.m. EDT (1538 GMT), on track for its biggest one-day fall since January 30.
Earlier in the session, it hit $1,336.99, its lowest since March 10.
The yellow metal has now dropped 3 percent in the last three sessions, set for its biggest three-day fall since December 19.
U.S. COMEX gold futures for April delivery fell $19.40 to $1,339.60 an ounce, with trading volume on track to finish near its 30-day average, preliminary Reuters data showed.
Gold has risen 11 percent this year, after a 28-percent drop in 2013, as geopolitical tensions and fears over slowing economic growth spurred demand for the metal as an insurance against risk.
CHINA WORRIES
Ukraine worries, China's first corporate bond default and fears of a slowdown in the world's No. 2 economy helped gold gain 3 percent last week, but a soft yuan is now stoking worries over physical demand from the world's top bullion consumer.
Joyce Liu, investment analyst at Phillip Futures in Singapore, said hedging against risk in response to events such as the Crimean crisis or China's bond default were only temporary safe-haven moves.
Among other precious metals, silver was down 0.7 percent to $20.63 an ounce. Platinum eased 0.3 percent at $1,445.70 an ounce, while palladium also dropped 0.3 percent to $762.40 an ounce.
(Additional reporting by Lewa Pardomuan in Singapore; Editing by William Hardy and Stephen Powell)