Gold prices fell on Thursday after the United States and China signalled willingness to resolve a trade dispute through negotiations, reducing demand for bullion as a perceived safe place to park money.
Investors moved back into equities, sending global stock markets higher, while the dollar strengthened, making gold more expensive for users of other currencies.
"It's been a double whammy (for gold)," said Fawad Razaqzada, an analyst at FOREX.com. "Stock markets have stabilized, at least for the time being, and that has reduced demand for safe havens." The slide in gold prices had also created a negative technical picture that encouraged further selling, Razaqzada said.
Gold had surged to $1,348.06 on Wednesday after Beijing threatened to retaliate against proposed U.S. tariffs on Chinese imports worth around $50 billion with its own duties on U.S. products including soybeans, planes, cars, whiskey and chemicals. Both Washington and Beijing later said they were willing to negotiate a resolution.
President Donald Trump's top economic adviser called the announcements by the two countries mere opening proposals and suggested the U.S. tariffs may never go into effect, while China's ambassador in Washington said Beijing's preference was to resolve the dispute through talks.
Technical support for gold was now around $1,320 and the 100-day moving average at $1,311, said MKS trader Sam Laughlin.
Gold prices reached an 18-month high of $1,366,07 in January but have since then been locked in a trading range between around $1,310 and $1,360. Investors were looking to U.S. jobs data on Friday to give new direction to prices.
Strong employment and wage growth would encourage the Federal Reserve to raise U.S. interest rates more aggressively and push gold prices lower.
Gold is sensitive to rising rates because they push up bond yields, reducing the attractiveness of non-yielding bullion, and tend to boost the dollar, in which gold is priced.
Trading volumes were likely to be lower however with markets in mainland China, the world's largest gold consumer, closed on Thursday and Friday for the Tomb Sweeping Day holiday.
In other precious metals, spot silver was up 0.73 percent at $16.39 an ounce. Platinum was 0.44 percent lower at $907.99 an ounce after touching $901.50, its lowest since December. Palladium sunk 2.44 percent at $901.97 an ounce after hitting a new six-month low at $907.22.