Gold prices retreated from a one-week peak overnight while palladium prices marked an all-time high after a report suggested that the Chinese government wants to reach an agreement with the US administration to avoid further escalation of a ongoing trade row.
Spot gold fell 0.6 per cent to $US1,496.79 per ounce, having earlier hit a one-week high.
US gold futures were down 0.7 per cent at $1,501.90.
“It is all about the tariffs. It is the he-said-she-said that whips the market back and forth. Right now you have the short term traders selling gold on the tariff news,” said Michael Matousek, head trader at US Global Investors.
Vice Premier Liu He said that China is willing to reach an agreement with the US on matters both sides care about, China’s Xinhua state news agency reported.
Earlier, gold rose to $US1,516.77 – its highest since October 3 – on a report that the Chinese delegation was planning to leave Washington DC after just a day of minister-level meetings, a day earlier than expected.
Trade talks between the two countries started on Thursday.
Markets have been on edge for weeks over the US-China trade tensions.
If negotiations break down again, nearly all Chinese goods imports into the United States – more than $US500 billion – could be subject to punitive tariffs by December 15.
“The major concern is that there is nothing going to come out of these negotiations, just kick the can further down the road,” said Daniel Pavilonis, senior market strategist at RJO Futures.
“So, if there is some type of an agreement, depending on what type of agreement it is, you would probably see a gold sell-off, at least that would be the initial reaction,” Pavilonis said, adding “gold and silver, from a technical standpoint, look pretty bullish.”
Palladium was 1.1 per cent higher at $US1,700.19, having hit a record $US1,704.59.
“For palladium, heightening (US-China) tensions had actually weighed but prices have remained elevated as the market was undersupplied,” said Suki Cooper, precious metals analyst at Standard Chartered Bank.
“As we had some positive trade developments, that has helped to support sentiment for more industry buyers.”
She added that inflows into exchange-traded funds suggested there was incremental demand for palladium but speculators could drive price fluctuations in the near term.
Platinum rose 1.1 per cent to $US901.55 an ounce while silver fell 0.7 per cent to $US17.57 per ounce.