Gold prices fell nearly 2% on Wednesday after US President Donald Trump withdrew his threat to fire US Federal Reserve Chairman Jerome Powell and expressed optimism about a trade deal with China - the leading metal consumer, reducing the appeal of gold as a safe-haven asset.
At 5:52 a.m. GMT, spot gold fell 1.9% to $3,318.71/ounce. US gold futures fell 2.7% to $3,328.10 an ounce.
Suggestions about US-China talks and Mr. Trump's withdrawal threatening to remove Mr. Powell's position "has caused gold prices to be sold off, falling into a short-term over-selling situation" - Kelvin Wong, senior market analyst for the Asia-Pacific region at OANDA commented.
US stocks and the US dollar recovered after Mr. Trump announced on Tuesday that he would withdraw his intention to fire Mr. Powell, after many days of continuously criticizing the Fed Chairman for not cutting interest rates.
The stronger US dollar makes gold more expensive for foreign buyers.
In addition, Mr. Trump also expressed hope that a trade deal with China could "significantly reduce" tariffs on Chinese goods, implying that the final deal would not be "close" to the current tariffs.
US Treasury Secretary Scott Bessent said he believes US-China trade tensions will cool down, but negotiations with Beijing have not yet begun and will be a "difficult process".
There is no signs of an exhaustion of the uptrend from the uptrend at the moment, so gold is still likely to increase further, added Mr. Wong of OANDA.
Fed President Minneapolis, Neel Kashkari, said it is too early to know whether short-term borrowing costs need to be adjusted due to the impact of Trump's tariffs on inflation and the economy.
Gold - seen as a hedge against global uncertainty and inflation - set a record for the 28th time this year, surpassing $3,500 for the first time on Tuesday.
JP Morgan expects gold prices to surpass $4,000/ounce next year.
Spot silver prices increased by 0.4% to 32.64 USD/ounce, platinum decreased by 0.1% to 957.90 USD/ounce and paladi lost 0.5% to 931.51 USD/ounce.
