Investing.com - Gold prices sank to a five-week low on Monday, as growing optimism that the United States and China would reach a trade deal as early as this month lifted risk-appetite and reduced demand for safe-haven assets.
Comex gold futures fell to a session low of $1,286.05 a troy ounce, a level last seen on Jan. 25. It was last at $1,289.65 by 8:35AM ET (13:35 GMT), down $9.65, or around 0.75%.
Meanwhile, spot gold was trading at $1,288.34 per ounce, down $5.13, or roughly 0.4%.
The metal is now down nearly 5% since first reports of a rapprochement on the trade dispute broke in late February.
U.S. President Donald Trump and Chinese President Xi Jinping could seal a formal trade deal at a summit around March 27 given progress in talks between the two countries, the Wall Street Journal reported on Sunday.
The world's two biggest economies appear close to a deal that would roll back U.S. tariffs on at least $200 billion worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs on U.S. goods.
That news sent 10-year U.S. Treasury yields up to a six-week high of 2.77%. Higher yields make gold, which doesn't bear interest, less attractive relative to rival 'haven' assets.
“Increasing risk appetite is clearly a little negative for gold,” Julius Baer analyst Carsten Menke said.
A stronger U.S. dollar also weighed on gold. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was at 96.50, its highest in around a week.
Looking ahead, gold could “lose further ground” if data at the end of the week points to an improvement in the U.S. labor market, analysts at Commerzbank (DE:CBKG) said in a note.
After a recent batch of disappointing U.S. economic data, the February jobs report, due on Friday, is the main event for markets this week, as investors look for further hints on the strength of the economy.
In other metals trading, silver futures dipped 1.1 cents, or about 0.1%, to trade at $15.16 a troy ounce.
Meanwhile, palladium futures shed 0.7% to $1,496.90 an ounce, while platinum dropped 2.3% to $843.65 an ounce.
-- Reuters contributed to this report