Gold slumped to its lowest in two weeks on Thursday, pressured by signs of easing trade tensions and a holiday in key consumer China, while focus was also on Friday's U.S. payrolls report to gauge the economic outlook.
Spot gold fell 2.3% to $3,211.53 an ounce by 1:44 p.m. ET (1744 GMT), after hitting its lowest since April 14 earlier in the session. It hit a record $3,500.05 an ounce last week.
U.S. gold futures settled 2.9% lower at $3,222.20.
"There are signs of an impending trade deal, and talk from China that the Trump administration has been in touch. The risk-on trade is taking place, leading to some profit-taking in the safe haven of gold," said Bob Haberkorn, senior market strategist at RJO Futures.
US President Donald Trump said trade deals could be reached with India, Japan and South Korea. There is a "very good chance" of securing a deal with China, he added.
Also, social media accounts affiliated with Chinese state media said the US has approached China to seek talks on Trump's 145% tariffs.
Chinese markets are closed for the May 1-5 Labor Day holiday.
TD Securities said in a note that "gold is being sucked into the liquidity vacuum caused by the holiday in China."
Data on Wednesday showed the US economy contracted in the first quarter, and the US personal consumption expenditures price index was unchanged in March. Now, all eyes are on the US nonfarm payrolls report due on Friday.
Federal Reserve policymakers have indicated that interest rates will remain unchanged until there are clear signs of inflation moving back to its 2% target or a potential deterioration in the jobs market.
Lower interest rates and geopolitical uncertainty are boosting the appeal of non-yielding bullion.
"Despite the short-term correction driven by improved market sentiment, the structural drivers underpinning gold's strength remain strong," wrote Ole Hansen, head of commodity strategy at Saxo Bank.
Spot silver fell 1.4% to $32.13, platinum fell 0.6% to $961.05, and palladium rose 0.4% to $941.33. (Newsmaker23)
Source: Reuters
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