Spot gold was down 1.4pc at $1,599.90 per ounce by 1155 GMT. It has gained more than 5pc for the quarter, and about 1pc this month. U.S. gold futures fell 1.8pc to $1,613.90.
"The combination of a strengthening dollar and better risk appetite is weighing on gold," OANDA analyst Craig Erlam said.
The dollar index rose 0.8pc after posting a nearly 1pc gain overnight, as Japanese investors and companies rushed to cover a greenback shortage before their fiscal year ends.
Strong Chinese factory data lifted world stocks on Tuesday but markets were heading their worst quarter since 2008, on jitters about the economic hit from the coronavirus.
More than 777,000 people have been infected by the new virus across the world and 37,561 have died, according to a Reuters tally.
Central banks around the world have announced major fiscal and monetary packages to try to limit the economic damage, as governments have extended lockdowns to combat the virus' spread.
"With central banks unleashing a tsunami of quantitative easing (QE) at a time when fear is running rampant in markets and (as) government debts are about to explode, it seems like the perfect cocktail that could push gold back to record highs," said Ajay Kedia, director at Kedia Commodities in Mumbai.
Meanwhile, Russia's central bank announced it would stop buying gold starting April 1 and offered no explanation behind the decision.
Among other precious metals, platinum dropped 0.9pc to $716.43 and was on track to post its biggest quarterly percentage decline since 2008.
The world's largest platinum producers Anglo American Platinum, Sibanye-Stillwater and Impala Platinum have declared force majeure on contracts after a three-week national lockdown in South Africa forced operations to close.
"Platinum demand from the automotive industry has been largely paralysed by the corona crisis," Commerzbank analysts said in a note.
"The production outages in South Africa will be unable to offset the negative effects on demand, assuming that production - as announced so far - remains restricted for only three weeks."
Palladium slipped 1pc to $2,304.30 an ounce, while Silver dropped 1.4pc to $13.91, and was set to post its worst quarter since 2013.