Gold prices fell 2% on Friday and were on track for a weekly decline as the dollar strengthened and signs of easing U.S.-China trade tensions after a report that Beijing has exempted some U.S. goods from its tariffs weighed on bullion.

Spot gold fell 1.7% to $3,292.99 an ounce by 1:39 a.m. EDT (1739 GMT), after dropping as much as 2% earlier in the session. Bullion was down 1.2% for the week.

U.S. gold futures settled 1.5% lower at $3,298.40.

"The apparent reduction in tariffs has had a negative impact on gold prices ... But so far we haven't seen any substantial liquidation," said TD Securities commodity strategist Daniel Ghali. "However, we know that they have continued to buy on dips over the last few sessions, so we think gold can continue its upward trajectory."

China is considering exempting some U.S. imports from 125% tariffs and has asked businesses to identify goods that could qualify, according to people briefed on the matter.

Earlier this week, U.S. President Donald Trump suggested a de-escalation of the tit-for-tat tariff battle, saying direct talks were underway.

Meanwhile, the U.S. dollar rose and was on track for its first weekly gain since March, making bullion more expensive for overseas buyers.

Gold, traditionally seen as a hedge against geopolitical and economic uncertainty, hit a record high of $3,500.05 an ounce and has gained more than 25% so far this year, on U.S.-China trade tensions and strong central bank demand.

"Trade war concerns were the main reason behind all the previous gold buying. However, it may be some time before we see any real progress and the concerns have not completely gone away," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

Elsewhere, spot silver fell 1.6% to $33.03 an ounce, but was headed for a third straight week of gains.

Platinum fell 0.5% to $965.53 and palladium fell 1.8% to $936.89. (Newsmaker23)

Source: Reuters