Gold fell nearly 1% on Tuesday as signs of easing U.S.-China trade tensions dampened some demand for the safe-haven asset, while investors braced for key economic data this week to gauge the Federal Reserve's policy outlook.

Spot gold fell 0.8% to $3,315.84 an ounce by 2:22 p.m. ET (1822 GMT). U.S. gold futures settled 0.4% lower at $3,333.6.

"There's some optimism that there's going to be a bit of a de-escalation in the trade war between the U.S. and China," said David Meger, director of metals trading at High Ridge Futures.

President Donald Trump's administration plans to mitigate the impact of auto tariffs by lowering taxes on foreign parts used in U.S.-made cars and ensuring imported cars aren't subject to tariffs, officials said. Easing trade tensions have led to a selloff in gold, a traditional hedge against rising global volatility, which has rallied in a record high of $3,500.05/oz last week.

U.S. Treasury Secretary Scott Bessent said Monday that several major trading partners have made "very good" proposals to avoid U.S. tariffs. China's recent moves to exempt certain U.S. goods from its retaliatory tariffs indicate a desire to ease trade tensions, Bessent added.

Investors' radars are now on a slew of key U.S. economic data this week, including the personal consumption expenditures price index on Wednesday, and the monthly nonfarm payrolls report on Friday. "Looking at key levels in the short term, $3,500 would be a reasonable level where you would see people come in and start liquidating which is the normal ebb and flow of the market," said Michael Matousek, head trader at U.S. Global Investors.

"For the end of the quarter, we could probably see gold up to $3,590. For the end of the year, I would expect $3,800 an ounce."

Spot silver fell 0.4% to $33.02 an ounce, platinum fell about 1% to $976.50 and palladium fell 1.3% to $936.41. (Newsmaker23)

Source: Reuters