Gold slid by as much as 2% on Monday as the dollar rallied and investors flocked to higher-risk assets after the agreement to resume of trade talks between the United States and China. Spot gold was down 1.66% to $1,385.75 per ounce at 1:46 p.m. EDT (1746 GMT), after earlier falling to $1,381.51, its lowest since June 20. US gold futures settled 1.7% lower to $1,389.30 per ounce.
The United States and China agreed on Saturday to resume trade negotiations after President Donald Trump offered concessions to his Chinese counterpart Xi Jinping when the two met on the sidelines of the G20 summit in Japan. The news spurred a rally in global stocks and sent the dollar index to the highest in more than a week, limiting flows into safe-haven bullion.
Gold prices hit a six-year high last week at $1,438.63 an ounce, driven by a dovish outlook from major central banks and an escalation of tensions between the United States and Iran. The metal has shed about $50 since it broke the $1,400 threshold, but some analysts see it as a healthy correction and an opportunity to buy. "We do not expect gold to fall significantly further. In our view, it is above all the upcoming European Central Bank and Fed rate cuts, and the political risks, that argue against any pronounced and lasting price slide," Commerzbank analysts said in a note.
Meanwhile, holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22% on Friday. Holdings had still risen nearly 7% in June as of last week. Among other precious metals, silver fell 1.1% to $15.14 per ounce, while palladium rose 0.68% to $1,548.51 per ounce. Platinum inched down 0.66% to $827.50, after hitting a six-week high of $846.11 per ounce earlier in the session.