Gold prices rose on Tuesday, reversing early losses as the Chinese yuan strengthened against the dollar after a report said the United States and China were trying to restart negotiations to defuse a trade war.
Spot gold rose 0.37 percent to $1,225.76 per ounce, rebounding after touching its lowest since July 19. The precious metal is heading for a 2 percent monthly decline. U.S. gold futures for August delivery settled up $2.40 at $1,223.70.
In early trade, a stronger dollar and rising U.S. interest rates had sent bullion falling to its lowest in a week and a half.
"Gold turned positive on the idea that there's a possibility of negotiating with China," said George Gero, managing director of RBC Wealth Management. "If they do negotiate and something good comes out of it, it is positive for metals, because it would help the Chinese come back into the market and take deliveries. There's been some worry about the Chinese not taking deliveries because of the tariffs and expensive dollar."
"The Chinese currency is preventing (gold) from dropping much further like we saw earlier in the morning," said Ryan McKay, commodities strategist at TD Securities.
The Chinese yuan had been weakening against the dollar, pressuring greenback-denominated gold. That pressure abated, providing gold some support, McKay added.