Gold retreated from a one-month high hit earlier overnight as stock markets and the US dollar took heart after the United States and China agreed to keep negotiations going to end their prolonged trade conflict.
Spot gold was 0.3 per cent lower at $US1,295.18 per ounce after hitting $US1,303.26 earlier in the session – its highest since April 11.
US gold futures settled down 0.4 per cent at 1,296.3.
“We are seeing a little readjustment because the dollar index is back up a little and stocks are rebounding and (gold) traders are taking a little money off the table for now,” said George Gero, managing director at RBC Wealth Management.
The US dollar index was up about 0.2 per cent after falling to near a one-month low in the previous session.
US stocks climbed following optimistic comments from Washington DC and Beijing.
US President Donald Trump said on Tuesday that trade talks with China have not collapsed and called the widening US-China tariff conflict “a little squabble,” even as his administration readies 25 per cent duties on all remaining Chinese imports.
“The impact of the US-China trade war has conflicting implications for gold,” Fawad Razaqzada, market analyst with Forex.com, wrote in a note.
Gold investors will have to consider the impact on physical demand from China in the event of a no deal, while higher tariffs on Chinese exports will also hurt the US consumer, further weighing on demand, Razaqzada added.
Gold climbed 1.1 per cent on Monday, marking its biggest one-day percentage rise since February 19, after China announced it would impose higher tariffs on a range of US goods, which followed a US decision last week to hike levies on $US200 billion in Chinese imports.
Investors were also keeping tabs on escalating tensions between the United States and Iran after Saudi Arabia said two of its oil tankers were among those attacked off the coast of the United Arab Emirates.
Headlines such as escalating Iran tensions are keeping gold from selling off, Gero said.
A rise in investor interest in bullion was also evident after holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.44 per cent on Monday, its biggest one-day rise in nearly two months.
“Gold is turning bullish on the daily charts as prices have broken above the previous higher low at $US1,290,” Lukman Otunuga, research analyst at FXTM, said in a note, adding, “a solid breakout and daily close above $US1,300 is likely to encourage a move higher towards $US1,310 and $US1,324, respectively.”
Among other precious metals, silver was up 0.1 per cent at $US14.78 per ounce.
Platinum rose 0.4 per cent to $US856.66 an ounce while palladium gained 1.4 per cent to $US1,340.52.