Gold prices fell on Thursday, pulling back from one-week highs reached the session before, as risk appetite recovered after the United States expressed willingness to resolve an escalating trade fight with China.
As investors pulled out of gold, Asian equities rebounded from two-month lows with investors hoping a full-blown trade war between the world’s two biggest economies can be averted.
Spot gold was down 0.3 percent at $1,329.11 per ounce by 0409 GMT, after touching a one-week high of $1,348.06 on Wednesday.
U.S. gold futures fell 0.6 percent to $1,332.60 an ounce.
The United States voiced willingness on Wednesday to talk with China after Beijing retaliated against proposed U.S. tariffs on $50 billion in Chinese goods by targeting key American imports.
Gold’s drop shows traders were “liquidating profits and opportunists taking advantage of the market on a short term basis,” said Joshua Rotbart, managing partner of J. Rotbart & Co in Hong Kong.
But Rotbart said “the more intense the trade war becomes, we will see higher demand for gold.”
China is the world’s largest gold consumer.
However, China’s Ambassador to the United States Cui Tiankai said on Wednesday that the United States and China should avoid a trade war, stressing that Beijing’s preference was to resolvethe dispute through negotiations.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, was largely steady at 852.03 tonnes on Wednesday from 852.31 tonnes on Tuesday.
Meanwhile, spot silver inched down 0.1 percent to $16.27 per ounce.
Platinum was off 0.6 percent at $906.74 an ounce, after earlier hitting $905.50, its lowest since December 22.
Palladium gained 0.3 percent to $927 an ounce after touching $913 on Wednesday, its weakest since early October.