Updated from 1:58 p.m. EST

Gold had a choppy session Monday as traders nervously awaited a big week of economic data.

After yo-yoing through the session, contracts for April delivery of bullion eventually settled $1.60 lower at $649.10 an ounce on the Comex division of the Nymex. The exchange-traded funds that hold the metal, streetTracks Gold Shares ( GLD) and iShares Comex Gold Trust ( IAU), were softer also, closing down about 0.5% and 0.7% respectively.

Of particular interest to traders this week will be the publication of the Federal Reserve's policy statement Wednesday afternoon.

"I think the Fed meeting is dominant in people's mind," says Gregory Miller, chief economist at SunTrust Bank in Atlanta. He notes that the economy appeared to speed up last month after a less robust October and November.

"December suggested we are past the worst," he says. "If the acceleration is confirmed, then the Fed will be less worried about slowing growth and less likely to ease."

In short, that would mean a reduced chance of policymakers lowering short-term interest rates. That would keep the dollar higher than some investors had previously anticipated, which would most likely be bad for gold because the metal tends to move inversely in value with the greenback.

The dollar was recently buying 121.94 yen, up from 121.60 late Friday. One euro would purchase $1.2954, up from $1.2913 previously.

Other economic statistics this week include the first pass on fourth-quarter GDP estimates, December personal income and spending data and the Institute for Supply Management's manufacturing index for January. Monthly payroll figures will round out the week on Friday.

In addition to the data minefield, any rally in gold will likely be hampered by reduced jewelry buying in India, where consumers have shunned purchasing items at the current inflated price levels, according to a research brief from Montreal-based bullion dealer Kitco.

Turning to the mining patch, JPMorgan was busy upgrading shares of silver producer Pan American Silver ( PAAS) to overweight from neutral, and downgrading Coeur d'Alene Mines ( CDE) to neutral from overweight.

Shares of Pan American closed down 0.1% at $27.78, and those of Coeur d'Alene ended the session down 4.2% at $4.30. On the Comex, benchmark silver contracts lost 13 cents at $13.25 an ounce.

The Market Vectors Gold Miners ETF ( GDX), which tracks a basket of precious metals producers, closed down 2% at $38.42.

Among base metals, Comex copper contracts ended the session down 10 cents at $2.54 a pound, on worries over rising London Metal Exchange inventories. Stocks totaled 207,700 tons as of Friday, up almost one-third from 156,725 tons at the beginning of December.

Not everyone believes that the current run-up in available supplies can be sustained for much longer as imports of copper into China look set to surge.

"Copper's overall tight conditions may rise to the surface again, although this time with the market already destocked, conditions may tighten up quickly," writes William Adams, a metals analyst with BaseMetals.com, in a research report. He notes that China supplied a significant portion of its internal copper needs last year by drawing down existing inventories rather than importing.

"With the destocking now likely to be winding down, the impact of strong real consumption may start to be felt far and wide," says Adams.

Elsewhere, copper miner Phelps Dodge ( PD) reported better-than-expected earnings, but investors shrugged and the stock closed down 2.3% at $121.45.

As for ferrous metals, KeyBanc Capital Markets initiated coverage on shares of Claymont Steel ( PLTE) with a hold rating. The stock rallied after earlier weakness to close 1% higher at $19.