Gold fell for a second session on Tuesday, as Sino-U.S. trade deal hopes buoyed the dollar and improved risk appetite, blunting investors' interest in the non-yielding bullion.
Spot gold <XAU=> was down 0.1% at $1,507.17 per ounce as of 0728 GMT, while U.S. gold futures declined 0.2% to $1,508.20 per ounce.
Beijing and Washington have shown signs of progress in trade talks with the Financial Times saying on Monday that the United States is considering whether to drop some tariffs on Chinese goods.
"The recent hopes of a trade truce between the United States and China have led to the strengthening of the dollar overnight, dragging prices today," Michael McCarthy, chief market strategist at CMC Markets said by telephone.
The U.S. dollar was close to its highest in almost a week against a basket of rivals on Tuesday, while Asian shares closed in on their July peak, on growing optimism for the United States and China to strike a preliminary deal to scale back their long-drawn trade war.
A stronger dollar makes gold expensive for holders of other currencies.
"Some positive trade headlines over the weekend and buoyant risk sentiment with equities at all-time highs will be a test of gold's resilience and market conviction in gold's uptrend," UBS strategist Joni Teves said in a note.
Shaving some fears of an upcoming recession, recent data suggests the outlook for the world's largest economy is not as bad as some had feared, although the U.S. Federal Reserve has cut interest rates three times this year.
After data last week showed U.S. job growth had slowed less than expected in October, investors now await a U.S. ISM non-manufacturing report due on Tuesday that is forecast to show activity accelerated slightly in October.
However, data on Monday showed new orders for U.S.-made goods fell more than expected in September and business spending on equipment was slightly weaker than initially thought, suggesting that manufacturing remains soft amid the trade war between the world's two biggest economies.
"Gold looks bullish in the long run as economic uncertainties still exists," said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, India, adding that over the next year gold might hit $1,600 mark as some central banks are poised to buy the metal.
Among other metals, silver <XAG=> was flat at $18.06 per ounce and platinum <XPT=> edged up 0.1% to $936.83 per ounce, having fallen more than 1% in the previous session.
Palladium <XPD=> was down 0.4% at $1,772.04 an ounce, after sliding 1.5% in the previous session.