Earlier, gold futures surged to another record high of $933.30 an ounce in electronic trading.

Gold for February delivery was last down 40 cents at $926.60 an ounce on the New York Mercantile Exchange.

The main focus remained the ongoing Federal Open Market Committee policy-setting meeting, with most still expecting another interest-rate cut Wednesday.

"The Federal Reserve's expected 50 basis-point interest-rate cut tomorrow, the credit and property bubble implosion and the supply problems in South Africa are helping gold consolidate again near record levels," said Mark O'Byrne, executive director at Gold and Silver Investments Ltd.

On Monday, gold surged $16.40, or 1.8%, to close at $927.10 an ounce, after hitting a record high of $929.80 an ounce earlier in the session.

Orders for U.S.-made durable goods surged in December, jumping 5.2% on higher demand for airplanes, communications equipment, and defense capital goods, the Commerce Department reported Tuesday. See Economic Report.

The increase far exceeded the expected 2.2% gain forecast by economists surveyed by MarketWatch. It was the largest gain in total orders since July.

The dismal data from the housing market, however, continues. Home prices in 10 U.S. cities have declined a record 8.4% in the 12 months ended in November, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. The 20-city price index has fallen a record 7.7% in the past year. Read more.

The dollar was mixed but remained in recent ranges against major counterparts, supported by the surprisingly strong rise in durable-goods orders for December. The dollar index, which tracks the performance of the greenback against six other major currencies, was at 75.612, compared with 75.590 in late U.S. trading Monday. See Currencies. Also on Nymex, March silver dropped 7 cents at $16.680 an ounce, April platinum declined $41.70 at $1,687 an ounce and March palladium dropped $8.35 to $383 an ounce.

March copper rose 6.55 cents at $3.2550 a pound.

Gold warehouse inventories were unchanged at 7.5 million troy ounces as of late Monday, according to Nymex data. Silver stockpiles rose to 135 million troy ounces, up 14,276 troy ounces, while copper supplies were virtually unchanged at 13,978 short tons, down 58 short tons.

Polya Lesova is a MarketWatch reporter based in New York.