Gold fell on Monday as optimism grew about U.S.-China trade ties following a report of constructive talks over the weekend, while losses were capped by a softer dollar.
Spot gold was down about 0.1 percent to $1,466.09 per ounce as of 0453 GMT, while U.S. gold futures were 0.1 percent lower at $1,466.40.
Chinese state media Xinhua reported Washington and Beijing had a high-level phone call on Saturday and that the two sides discussed each other’s core issues for the first phase of an initial trade agreement.
“A recovery in risk sentiment across Asia and investors cautiously optimistic about the phase one deal to go through before Christmas, are weighing on gold,” said Margaret Yang Yan, a market analyst at CMC Markets, adding that a weak dollar limited the metal’s fall.
Asian shares advanced after Beijing surprised markets by trimming a key interest rate for the first time since 2015, stirring speculation that more stimulus was on the way for the world’s second-largest economy.
The dollar was a shade softer versus major currencies.
“In all likelihood, a breakdown in trade talks remains the only scenario to breathe new life into gold prices at this time,” Jeffrey Halley, senior market analyst, Asia Pacific at OANDA said in a note.
Investors also kept a close eye on developments in Hong Kong, with police on Monday trapping hundreds of protesters inside a major university and demonstrators rampaging through a tourist district, after almost two straight days of standoffs.
Gold is considered a safe store of value during times of economic or political uncertainty.
Market participants now await minutes of the Federal Reserve’s last policy meeting, due on Wednesday, for clues about the future interest rate trajectory.
Gold is highly sensitive to interest rates, as a lower interest reduces the opportunity cost of holding the non-yielding bullion.
On the technical front, spot gold looks neutral in a narrow range of $1,462-$1,472 per ounce but a break above $1,472 may lead to a gain limited to $1,480, according to Reuters technical analyst Wang Tao.
Among other metals, silver was down 0.2 percent at $16.91 per ounce, while platinum rose 0.2 percent to $890.89 per ounce.
Palladium rose 1 percent to $1,722 per ounce.