Gold edged lower on Thursday in response to an easing of trade tensions after the United States agreed to refrain from imposing tariffs on cars from the European Union.
The two sides will also begin talks to cut other trade barriers, they announced on Wednesday following a meeting at the White House. Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade.
Spot gold slipped half a percent to $1,225.06 per ounce. In the previous session, the metal hit $1,235.16, its highest in more than a week. U.S. gold futures for August delivery settled down $6.10 at $1,225.70.
"The rise is partially to do with the news that Trump and the EU called a cease fire on trade war and a halt on auto tariffs," said Natixis precious metals analyst Bernard Dahdah. "But gold has been dropping since April so there is a bigger story behind this fall rather than just the EU-US story at the moment."
Gold is currently trading about 10 percent off its April high due to pressure from a stronger dollar, but the U.S. currency moved sideways on Thursday. Meanwhile, the MSCI world equity index rose to its highest since March, signaling investor demand for higher risk assets.
"The euro recovery against the greenback has also failed to lift bullion, confirming that there is little investor appetite for the precious metal at this time," said ActivTrades chief analyst Carlo Alberto De Casa.
Investors looked to the European Central Bank after it kept interest rates unchanged.
With inflation rebounding, the ECB decided last month to end a 2.6 trillion euro bond purchase scheme by the end of December but also promised protracted stimulus for years to come as the euro zone is economy is still far from full health.
"The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 percent over the medium term," the ECB said in a policy statement.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund fell 0.29 percent to 800.20 tonnes on Wednesday.
In other precious metals, silver lost 0.69 percent to $15.45 while platinum fell 1.61 percent to $826.75. Platinum touched an over one-week high at $941.10 in the previous session. Palladium dropped 0.46 percent to $934.72.