Gold firmed on Monday, erasing losses from earlier in the session as fresh doubts over a U.S.-China trade deal pushed Wall Street into the red.
Spot gold was up 0.29% at $1,471.4 per ounce as of, reversing course from earlier when prices fell to as low as $1,455.82 on optimism that constructive trade talks had taken place between the world's two largest economies over the weekend. U.S. gold futures settled up 0.22% to $1471.9 per ounce.
However, a report that Beijing was not as optimistic, owing to U.S. President Donald Trump's reluctance to roll back tariffs, threw cold water over market cheer and on world shares that were near record levels.
"I am surprised how robustly the market reacts (to news on the trade talks). This isn't the first time we have had this news, but the market keeps responding," said Bart Melek, head of commodity strategies at TD Securities, adding that the report on pessimism from Beijing has triggered a rebound in gold prices. "It looks like gold is seeking a move towards $1,480, which is the 100-day moving average."
The 16-month long Sino-U.S. tariff war has fanned recessionary fears, but recent optimism over a phase one deal has driven a rally in equity markets.
Gold is generally considered to be an attractive investment during times of political or economic uncertainty. Market participants now await minutes of the U.S. Federal Reserve's last policy meeting, due on Wednesday, for clues about the future interest rate trajectory.
Gold is highly sensitive to interest rates, as lower interest rates reduce the opportunity cost of holding the non-yielding bullion. Investors also kept a close eye on developments in Hong Kong, with police on Monday trapping hundreds of protesters inside a major university and demonstrators rampaging through a tourist district, after almost two straight days of standoffs.
Among other metals, silver gained 0.3% to $17 an ounce and palladium rose 1.4% to $1,728.02 an ounce. Platinum rose 0.4% to $892.55, extending gains for a fourth straight session.