Gold fell 1.0 per cent overnight as growing risk appetite boosted investor demand for equities while a sustained supply crunch in palladium propelled the price of that precious metal to a record high.
Spot gold fell 0.8 per cent to $US1,481.40 per ounce, having slipped 1.0 per cent earlier in the session.
US gold futures settled down 0.9 per cent at $US1,483.50.
“Right now what’s pushing it (gold) down is the stocks. We have earnings coming out now and stocks look strong. There is no risk aversion right now,” said Bob Haberkorn, senior market strategist at RJO Futures.
US equity markets rose on strong earnings reports even as optimism faded over the latest China-US trade truce.
“Gold needs a headline to push it higher; the US Federal Reserve to talk about rate cuts or something to happen on the trade talks. If the deal falls apart and the Fed cuts rates, gold will go up,” RJO Futures’ Haberkorn added.
The US Federal Reserve meets at the end of the month to decide on whether to implement further interest rate cuts.
Bloomberg reported on Monday that China wanted more talks to hammer out details of the phase-one deal before signing it.
Investors are also watching a make-or-break summit between Britain and the European Union on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on October 31, a disorderly no-deal exit or a delay.
Gold denominated in sterling slid more than 2.0 per cent to its lowest since the end of July at 1,154.35 pounds an ounce.
Palladium extended its strong rally, gaining 1.1 per cent to $US1,733.06 an ounce after hitting a record $US1,739.93.
The metal, used in vehicle exhaust systems to reduce harmful emissions, has rallied more than $US300 since early August when it touched the lowest in nearly two months.
“Palladium is in short supply. It will continue to be so and higher prices maybe till $US2,000 is well within the realm of possibilities, particularly if we see automotive activity rebound a bit,” said Bart Melek, head of commodity strategies at TD Securities in Toronto.
“We have a structural deficit problem within the palladium market. The inventories and exchange traded funds which have been used over the years to feed the gap between primary supply and demand are down.”
Among other metals, silver fell 1.4 per cent to $US17.40 per ounce while platinum fell 1.2 per cent to $US882.08.