Gold slipped 2 percent to a 3-1/2 month low on Tuesday, extending losses after strong US data lifted optimism about the economy, while platinum fell after South Africa's mining minister pledged to mediate in a long-running strike.

US consumer confidence rose in line with expectations, with the Conference Board index at 83 in May from a downwardly revised 81.7 in April, as consumers saw the economy, including the labour market, in a better light.

Separately, the Commerce Department said durable goods orders increased 0.8 percent as demand for defence capital goods surged.

Spot gold fell 2 percent to its lowest since February 10 at $1,265.76 an ounce in earlier trade and was down 1.9 percent at $1,268.10 an ounce by 1441 GMT, heading for its worst daily loss in two months. US gold futures dropped 1.8 percent to $1,268.50 an ounce.

Equity markets were firmer, eroding gold's appeal as a hedge against riskier assets, while the dollar cut its losses after the data.

Gold has struggled to break consistently above the $1,300-per-ounce level for the past two weeks, indicating a lack of conviction by investors and speculators, analysts said.

China's gold imports from main conduit Hong Kong fell to a 14-month low of 67.040 tonnes in April from 85.128 tonnes in March, as a weaker yuan and local discounts curbed demand.

In No. 2 consumer India, investors are hoping the new government would relax rules imposed on gold imports last year, a move they believe will spur pent-up demand. - Reuters