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 Gold retreated on Wednesday, on course for its largest percentage decline in over three weeks, after minutes from the U.S. Federal Reserve's latest policy meeting flagged uncertainty about the timing of potential interest-rate cuts.

Spot gold fell 1%, to a nearly two-week low of $2,037.61 per ounce by 2:40 p.m. ET (1940 GMT), its biggest decline since Dec. 11.

U.S. gold futures settled 1.5% lower, at $2,042.80.

Fed officials appeared increasingly convinced that inflation was coming under control, with "upside risks" diminished and growing concern that "overly restrictive" monetary policy might damage the economy, according to the minutes.

"'Hold your horses' is the message coming from December's Fed minutes - while we have seen highs for the cycle, rate cuts will take more time, especially with easing financial conditions and high uncertainty," said Tai Wong, a New York-based independent metals trader.

The minutes said participants had noted "an unusually elevated degree of uncertainty" about the outlook on rate cuts, with further interest rate increases still possible.

Investors currently see a 70% chance the Fed will cut rates beginning at its meeting in March, while economists on balance see it holding off until closer to mid-year.

Lower interest rates decrease the opportunity cost of holding non-yielding gold.

The dollar index firmed 0.3%, making gold more expensive for other currency holders. [USD/]

Investors now keenly await a slew of U.S. economic data this week, including the non-farm payrolls report on Friday.

Markets are also monitoring developments in the Middle East after the Israel-Hamas conflict reached Lebanon with the killing of Hamas's deputy leader in Beirut.

Spot silver fell 2.7%, to a three-week low of $23.00 per ounce. Platinum was down 1% at $972.32, its lowest since Dec. 22, and palladium also fell 1%, to $1,070.39, set to decline for the seventh straight session.