Picture: REUTERS
Picture: REUTERS

Bengaluru — Gold fell to a two-week low on Tuesday as talks between top negotiators from the US and China boosted prospects that an interim trade deal could be reached soon, denting demand for the safe-haven metal.

Spot gold was down 0.1% to $1,454.19 by 3.30am GMT, having fallen to its lowest since November 12 earlier in the session. US gold futures edged 0.2% lower to $1,453.80.

“We’re seeing some momentum and signs of progress in the trade talks; also expecting some good (economic) data this week and all this is collectively providing optimism. It is risk on, so gold prices are under pressure,” Phillip Futures analyst Benjamin Lu said.

China’s vice-premier Liu He, US trade representative Robert Lighthizer and US  treasury secretary Steven Mnuchin held a phone call on issues related to a phase one agreement, two days after a report that Beijing and Washington are “moving closer to agreeing” on the deal.

Asian stocks rose and the dollar hovered near two-week highs on growing hopes that the world’s top two economies will reach an agreement soon. Markets also welcomed further signs of a de-escalation, with China saying on Sunday it would improve protections for intellectual property rights.

“On the flip side, there hasn’t been much substantial detail other than they (US and China) are working closely, and besides the US, other parts of the world are still showing slow economic growth, so gold will still be supported,” Lu said.

Gold, considered a safe asset in times of political and economic uncertainty, has gained more than 13% this year, mainly due to the tariff dispute and its effect on global economic growth.

US Federal Reserve chair Jerome Powell said on Monday officials have a favourable outlook for the US economy. However, weak global growth and trade uncertainty are holding back growth and they will “respond accordingly” if economic data leads to a “material reassessment” of their outlook, he said.

The central bank cut interest rates three times this year before deciding to pause. Lower interest rates reduce the opportunity cost for holders of bullion, an asset that brings no interest. Under investors’ radar now is US consumer confidence data due at 3pm GMT.

Elsewhere, silver shed 0.3% to $16.85 an ounce, after touching a one-week low. Palladium rose 0.1% to $1,798.99 an ounce and platinum was up 0.1% to $897.44.