Gold prices falls on optimism over U.S.-China trade deal

Several gold bars are shown being held in a hand.
Akos Stiller | Bloomberg | Getty Images

Gold prices fell on Tuesday as growing optimism over U.S.-China trade relations dented the metal's safe-haven appeal, while investors awaited a speech by Federal Reserve Chair Jerome Powell this week.

Spot gold fell 0.6% to $1,920.91 per ounce. U.S. gold futures settled down 0.8%, at 1,923.10.

"We have a little optimism on U.S.-China relations, while there is some optimism regarding the coronavirus (treatment) ... so, little lesser need for safe havens," said David Meger, director of metals trading at High Ridge Futures.

Top U.S. and Chinese trade officials on Tuesday reaffirmed their commitment to a Phase 1 trade deal, adding to positive news over progress in developing a treatment for COVID-19.

On Sunday, U.S. President Donald Trump hailed Food and Drug Administration authorization of a virus treatment that uses blood plasma from recovered patients.

Data showed U.S. consumer confidence fell in August to a more than six-year low, as households worried about the labor market and incomes.

"That was heavily priced in. Confidence is souring and that is just going to force Congress to deliver more stimulus," said Edward Moya, senior market analyst at broker OANDA.

"Because of all the uncertainty ... they can't let all the efforts go to waste, and that is going to cement the bullish outlook for gold."

Global central banks and governments have pumped in massive monetary and fiscal stimulus to prop up virus-hit economies, helping bullion gain over 25% so far this year.

Powell will speak at a gathering of central bankers in Jackson Hole, Wyoming, on Thursday.

The U.S. central bank has kept benchmark interest rates near zero which is positive for non-yielding gold.

Silver fell 1% to $26.28 per ounce, platinum rose 0.7% to $922.08, while palladium gained 0.4% at $2,168.65.