Gold fell on Tuesday as global stocks rose on improved prospects for a U.S.-China trade deal and the dollar regained some ground, while palladium notched a fresh all-time high on tight supply.
Spot gold slipped 0.3 percent to $1,284.75 per ounce as of 1:48 p.m. ET. U.S. gold futures settled down $4 at $1,285.90 per ounce.
"People are waiting to see what happens with the tariff talks between U.S. and China," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
"We could see gold come off on a deal getting done as investors might ship in other assets where they may benefit more."
World stocks, which have been pressured by global growth concerns, rallied on hopes that United States and China may be moving toward a trade deal.
The two countries will continue trade talks in Beijing for an unscheduled third day, a member of the U.S. delegation said on Tuesday.
"I think the fact equity prices have stabilized has had a bit of a negative impact on gold prices, especially as the yellow metal has already reached a critical resistance area around $1,295," said Fawad Razaqzada, an analyst with Forex.com.
Bullion prices on Friday hit their highest since June 2018 at $1,298.42 largely on the back of stock sell-offs and concerns over the global economy.
Reflecting investors' interest in bullion are the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which had some outflows on Monday. But holdings are still at their highest since August 2018.
"ETF demand has been one of the primary drivers of the move higher for gold over the past month or so and is still continuing to increase," MKS PAMP Group traders said in a note.
"This has been mainly apparent in U.S. and UK based funds amid uncertainty on growth and Brexit risks," they said.
Among other precious metals, palladium was trading at a premium to gold. The auto-catalyst metal was up 0.98 percent at $1,312.30 per ounce, after hitting a record high of $1,328.62.
"The expectation of the supply-demand issue is going to continue and accelerate. ... The supply is not going to be able to reach demand," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
"The next level of resistance (for spot palladium) will be around the 1,342 level."