Gold fell on Wednesday as a de-escalation in US-China trade tensions dampened safe-haven demand, while markets eyed another batch of inflation data to gauge the Federal Reserve's policy path.

Spot gold was down 0.7% at $3,226.11 an ounce, as of 0430 GMT. US gold futures were down 0.6% at $3,229.50.

"The positive developments in US trade policy (are) dampening the appeal of gold in the short term," said Kyle Rodda, financial markets analyst at Capital.com.

"I think if we see continued progress in trade negotiations and deals being done between the US and its trading partners, gold could fall further. $3,200 is a pretty important support level." The U.S. will cut "de minimus" tariffs on low-value shipments from China to 30%, according to a White House executive order and industry experts, further easing a potentially damaging trade war between the world's two largest economies.

On Monday, U.S. President Donald Trump said he did not see tariffs on Chinese imports returning to 145% after a 90-day pause, adding that he was confident Washington and Beijing would reach a deal.

Meanwhile, the U.S. Labor Department said its consumer price index rose 0.2% in April, while economists polled by Reuters had forecast a 0.3% increase following a 0.1% decline in March.

Traders await Producer Price Index data, due on Thursday, for clues on the Fed's interest rate trajectory. Markets are expecting a 53 basis point rate cut this year, starting in September.

Gold, traditionally seen as a hedge against inflation, also tends to thrive in a low-interest-rate environment. On Tuesday, Trump reiterated his call for the Fed to lower interest rates, saying gas, groceries and "almost everything else" were falling.

Spot silver fell 0.8% to $32.61 an ounce, platinum was steady at $988.65, and palladium fell 0.9% to $948.60. (Newsmaker23)

Source: Reuters