Gold retreated slightly from a one-month high on Tuesday as equity markets enjoyed some respite after the United States and China adopted a more optimistic tone on their trade dispute.
Spot gold was down 0.2% at $1,297.73 per ounce as of 1023 GMT, after hitting $1,303.26 in the session, its highest since April 11.
US gold futures were down 0.3% at $1,298.40.
"The most recent noise around the trade tensions has been settling a little bit," said Julius Baer analyst Carsten Menke.
"We're hearing voices out of the U.S. that the talks are going to continue and (also) see a little bit of recovery in equities. So it's not all as negative as it had been in the past few days and that's the reason gold is consolidating."
On Monday, the metal rose 1.1% to mark its biggest one-day percentage rise since Feb. 19 after China announced it would impose higher tariffs on a range of U.S. goods, which followed Washington's decision last week to hike its own levies on $200 billion in Chinese imports.
However, both nations have since put on a slightly more optimistic stance, agreeing to keep negotiations going to end the prolonged trade war that has rattled financial markets.
US President Donald Trump said he thought recent discussions in Beijing would be successful and that he was optimistic about resolving the trade spat.
The optimistic comments brought some comfort to the equity markets, a day after their worst selloff this year.
Besides trade worries, gold investors were also keeping tabs on escalating tensions between the United States and Iran after Saudi Arabia said on Monday that two of its oil tankers were among those attacked off the coast of the United Arab Emirates.
"The Middle East escalation news brings us a step closer to a significant U.S. military reprisal. Fears that China will weaponise US Treasuries in trade war retaliation is scaring the daylights out of markets even if it is unlikely," said Stephen Innes, head of trading and market strategy at SPI Asset Management.
Rise in investor interest in bullion was also evident after holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.44% on Monday, its biggest one-day rise in nearly two months.
On the technical front, spot gold may test a resistance at $1,307 per ounce, a break above which could lead to a gain to $1,322, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver was steady at $14.76 per ounce.
Platinum rose 0.6% to $858.10 an ounce, palladium climbed 0.6% to $1,330.36.
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