Gold prices eased on Friday, heading for a third straight weekly fall, as positive U.S. retail sales data and hopes for a thaw in Sino-U.S. trade tensions lifted equities and yields to multi-week highs.
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"With better-than-expected data along with a rise in global equity markets, we are seeing gold fall off its earlier highs. Optimism about trade has led to a bounce in global equities and lesser need for safe-haven commodities such as gold," said David Meger, director of metals trading at High Ridge Futures.
"Underlying theme of global central bank easing continues to be a supportive factor for gold on the one side and you have some pressure coming from global equities and better prospects of trade."
U.S. Treasury yields rose across the board after data showed U.S. retail sales rose in August, suggesting the risk of recession in the world's largest economy continues to diminish.
Global shares also climbed to a six-week high on further signs of progress in U.S.-China trade talks and added stimulus from the European Central Bank.
Washington and Beijing toned down signs of any previous escalation in their dispute with reconciliatory gestures from both nations, further boosting the risk appetite in markets.
Investors are now awaiting the U.S. central bank meeting next week, when it is expected to cut its benchmark interest rate by at least 25 basis points for the second consecutive time.
Analysts said that dovish monetary policy adopted by global central banks along with concerns of a glut in negative-yielding government debt globally will continue to support bullion in the longer term.
"Gold is going to remain around these levels or drift higher. Gold is actually paying more than any other 30-year bond, and every small move actually pays more than bonds," said an analyst based in New York.
Elsewhere, palladium fell 1% to $1,602.19 per ounce, after hitting an all-time high of $1,621.55 on Thursday. The rally in prices of the auto-catalyst metal was due to alleviated supply concerns arising from possible labor issues in South African mines.
Palladium was up over 4% so far this week and on track for a sixth straight weekly gain.
Silver shed 1.5% to $17.83 per ounce, while platinum edged 0.2% higher to $953.14 and was on course to gain for a fourth week.