Gold fell on Wednesday as the dollar and U.S. Treasury yields jumped on robust U.S. data and signs of an easing in the U.S.-China trade conflict.
Spot gold was down 0.66 percent at $1,321.47 per ounce, as of 2:24 p.m. ET, erasing the gains made in the previous session when it broke a three-session losing streak. U.S. gold futures for June delivery dropped 0.76 percent to $1,322.90 per ounce.
U.S Treasury yields rose to 3 percent for the first time in more than four years, reflecting the durability of the U.S. economic expansion after U.S. consumer confidence rebounded in April and new home sales increased more than expected in March.
But higher yields on bonds make gold a less attractive investment because it pays no interest.
Meanwhile, there was a decline in political risk after the United States said it would likely reach a trade agreement with China and that officials from both sides would sit down for negotiations in a few days.
"Recently there has been some optimism that the U.S-China trade war isnt going to be as big of an issue," said Natixis precious metals analyst Bernard Dahdah. "There is a bit more confidence in the U.S. and that negatively affects gold, naturally, in terms of geopolitics."
The dollar index, which measures the greenback against a basket of currencies, rose 0.41 percent to 91.13. World stocks were down for the fifth straight session on Wednesday.
"As traders put geopolitical and trade risk in the rear-view mirror for the time being, how the dollar flourishes and wilts will be the primary driver of near-term gold sentiment," said Stephen Innes, APAC trading head, OANDA.
Gold is often seen as an alternative investment during times of political and financial uncertainty. "I think that the downward trend (in gold prices) will continue for the next few days..." ahead of a meeting between leaders of North Korea and the South, said Ji Ming, chief analyst, Shandong Gold Group.
Palladium fell for a third straight session, down just 0.15 percent at $973 an ounce.