Gold fell to a one-week low on Monday after the United States and China expressed willingness to sign an initial trade deal by the year-end, lifting demand for riskier assets and boosting the dollar. Spot gold eased 0.2 percent to $1,459.16 per ounce by 0728 GMT, having earlier fallen to its lowest since November 18. US gold futures fell 0.3 percent to $1,459.
"Trade optimism is sending global equities higher and capital is fleeing away from safe havens into risk assets," said Margaret Yang Yan, a market analyst at CMC Markets.
Upbeat headlines about trade talks between Washington and China helped Asian shares regain footing, while the dollar rose, making bullion expensive for holders of other currencies.
The US currency rebounded strongly on Friday after a survey showed the US manufacturing output accelerated in November and services activity picked up more than expected.
"U.S. economic data has shown signs of stabilisation recently ... also consensus is that the global slowdown is going to bottom in the first quarter of next year and then start to rebound," Yan said.
Gold, considered a safe asset in times of political and economic uncertainty, has gained over 13 percent this year, mainly due to the tariff dispute and global economic concerns.
"Prices can fall below $1,400 if a 'phase 1' trade deal is signed. However, we can get a clear direction only after the first phase is completed," said Hareesh V, head of commodity research at Geojit Financial Services.
Investors were still cautious on trade talks with U.S. and Beijing officials saying an ambitious "phase two" trade deal looked less likely.
"U.S. economic data will likely factor a lot into gold traders' decision making into year-end as will the ebb and flow of trade talks. But ultimately, it's all about the (U.S. Federal Reserve) Fed policy, U.S. interest rates and the dollar," AxiTrader market strategist Stephen Innes said in a note.
Lower interest rates reduce the opportunity cost for holding the non-yielding bullion.
Speculators increased their bullish positions in COMEX gold and silver contracts in the week to November 19.
Spot gold may test a support at $1,455 per ounce, a break below which could cause a fall to $1,440, according to Reuters technical analyst Wang Tao.
Elsewhere, silver dipped 0.6 percent to $16.90 per ounce, after touching its lowest in a week.
Palladium rose 0.7 percent to $1,787.93 per ounce, having earlier hit its highest since November 8, and platinum gained 0.3 percent to $893.62.
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