Gold fell on Tuesday as Sino-U.S. economic deals lifted the US greenback and increased risk appetite, dampening investor interest in the non-performing bullion.
Spot gold fell to $1,507.16 an ounce by 0.1 percent, while U.S. gold futures slipped to $1,508.21 an ounce by 0.2 percent.
Beijing and Washington have shown signs of progress in trade talks with the Financial Times reporting that the U.S. was considering dropping certain tariffs on Chinese goods on Monday.
"Recent rumors of a US-China trade agreement have contributed to the dollar being boosted overnight, pulling prices today," said Michael McCarthy, CMC Markets chief market strategist.
The U.S. dollar was close to its highest in nearly a week against a rival basket of other currencies late Tuesday, while Asian shares closed in on their July peak, growing optimism for the U.S. and China to put closure on their preliminary deal.
A stronger dollar makes gold costly for other currency holders. According to UBS economist Joni Teves in a statement, many strong weekend trading reports and a buoyant sense of threat with equity at all-time highs will be a measure of the durability of gold and investor confidence.
Scraping off some fears of a coming recession, recent data suggest that the outlook for the largest economy in the world is not as bad as some had feared, though the Federal Reserve has cut interest rates on three occasions lately.
After data showed U.S. job growth in October last week had slowed less than expected, investors are now waiting for a U.S. ISM non-manufacturing report expected to show slightly accelerated activity in October.
However, figures indicated new shipment for U.S.-made products were down in September and trade expenditure on equipment was modestly weaker than initially estimated, suggesting that factory output remains soft in the midst of the trade tussle between Washington and Beijing.
"Gold looks bullish in the long run as there are still economic uncertainties," said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, India, adding that gold could hit the $1,600 region in the coming months as some central banks are ready to buy the precious metal.
Among other metals, gold was steady at $18.06 per ounce, while platinum rose 0.1 percent to $936.83 per ounce, slipping over 1 percent in the previous session.
Meanwhile, in Asia optimism has been sparked by the first cut in its medium-term lending rate from the People's Bank of China since early 2016. It was just a nominal 5 basis points to 3.24 percent, but it demonstrated the willingness of Beijing to support the economy.
