Gold prices fell 1% on Monday as optimism in equity markets ahead of the signing of an interim US-China trade deal and lack of further escalation in Middle East tensions diminished bullion's safe-haven appeal.
The US-China Phase 1 agreement is due to be signed at the White House on Wednesday.
Spot gold dipped 0.5% to $1,553.60 per ounce as of 1246 GMT, having fallen 1% to $1,546.27 earlier in the session.
US gold futures fell 0.4% to $1,554.50.
"We are struggling (a) little bit with the details. It'll be quite interesting to see if there is any concrete guidance in the details of the phase-one deal," said Julius Baer analyst Carsten Menke.
"Also, the news that the Chinese and the US would meet on semi-annual basis to discuss trade, I imagine was something which wasn't expected by the market, and could be weighing on gold."
A Wall Street Journal report said on Saturday Washington and Beijing had agreed to semi-annual talks aimed at pushing for reforms in both countries and resolving disputes.
The positive sentiment ahead of the planned signing boosted global equities, which were hovering just below record levels, while the US dollar gained against key rivals.
Stronger appetite for riskier assets weighs on greenback-denominated gold.
Bullion rose to a near 7-year peak of $1,610.90 last week after a US drone strike killed a top Iranian commander in Baghdad and Iran launched missiles against US bases in Iraq in retaliation.
The rally, however, faded with a lack of further military escalation in the region.
The United States imposed more sanctions on Iran on Friday and vowed to tighten the economic screws if Tehran continued "terrorist" acts or pursued a nuclear bomb.
"The tensions between US and Iran seems to have calmed down a little bit, at least for the time being, and people are just taking profits on that," said Afshin Nabavi, senior vice president at precious metals trader MKS SA.
Reflecting investor sentiment, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.9% to 874.52 tonnes on Friday, their lowest since Sept. 16.
On the technical front, gold is testing the support level of $1,550 and a fall below that would be a negative signal, opening space for further declines, Carlo Alberto De Casa, Chief analyst at ActivTrades said in a note.
Elsewhere, palladium rose 1.2% to $2,142.52 an ounce. Silver was down 0.5% at $18, while platinum fell 0.5% to $973.32.
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