Gold prices edged up on Friday on doubts that the highly anticipated meeting between the United States and China would ease trade tensions, driving bullion to its best month in three-years.
Spot gold was up 0.3% at $1,413.67 per ounce as of 0945 GMT. Gold has risen nearly 8.3% so far this month, on track for its biggest monthly percentage gain since June 2016. With nearly 1.2% gained so far this week, the metal is also set to post its sixth consecutive weekly rise.
U.S. gold futures climbed 0.3% to $1,415.80.
White House economic adviser, Larry Kudlow said U.S. President Donald Trump has agreed to no preconditions for his high-stakes meeting with China's President Xi Jinping and is maintaining his threat to impose new tariffs on Chinese goods.
"Doubts about the success of the meeting between the two leaders have been weighing on risky assets; that is positive for gold," said Quantitative Commodity Research analyst Peter Fertig.
The leaders of the Group of 20 countries meet on Friday and Saturday in Osaka, Japan, with a meeting between Trump and Xi scheduled for Saturday.
The trade tensions weighed on equity markets, boosting the appeal of safe-haven bullion.
The dollar index declined 0.1% after coming close to a one-week high in the previous session, making bullion cheaper for buyers in other currencies.
"There have been signals from the recent Federal Open Market Committee on rate cuts. Real yields on government bonds have been falling, which is positive for precious metals along with the weakening U.S. dollar. The outlook for gold looks positive from the fundamental side," Fertig said.
Gold prices have gained more than $80 in the last two weeks, especially on expectations that there will be at least a quarter percentage point reduction in July by the Fed.
"The sustained decline in rates is a key factor(for gold), particularly as the Fed shifts to a more dovish stance," UBS analysts said in a note, raising their three-month price target to $1,430 from $1,380.
"Uncertainty around growth and trade risks suggests more strategic positions are likely to be built."
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3% to 795.80 tonnes on Thursday, from Wednesday.
However, holdings have still gained more than 7% this month.
Silver inched down 0.1% to $15.24 per ounce, on track for its first monthly gain in five.
Palladium fell 0.9% to $1,537.20 an ounce. However, the auto-catalyst metal has risen more than 16% so far this month, its biggest monthly percentage gain since November 2016.
Platinum was up 0.3% at $815.32.