Gold prices fell more than 1% on Wednesday as hopes around trade talks between the United States and China weighed on the safe-haven metal ahead of a Federal Reserve rates decision later in the day.
Spot gold was down 1.2% to $3,386.23 an ounce as of 0816 GMT, after a sharp rise in the previous session.
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U.S. gold futures lost 0.8% to $3,394.90.
A line chart titled "Spot gold price in USD per oz" that tracks the metric over time.
"Late yesterday, reports emerged of a potential meeting between U.S. and Chinese officials this week, which could bolster sentiment if confirmed by Chinese and U.S. authorities," said Zain Vawda, analyst at MarketPulse by OANDA.
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U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet top Chinese economic official, He Lifeng, in Switzerland this weekend to discuss tariffs.
Both the U.S. and China imposed tit-for-tat tariffs last month, triggering a trade war that stoked global recessionary fears, prompting investors to take refuge in safe-haven assets such as gold.
Market focus now shifts to the Fed policy announcement at 1800 GMT. The central bank is widely expected to keep rates steady but investors will look for signals on future rate cuts.
Markets now imply only a 30% chance of a Fed rate cut in June, according to CME FedWatch Tool.
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Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low-interest rate environment.
On the geopolitical front, India attacked Pakistan and Pakistani Kashmir on Wednesday and Pakistan said it had shot down five Indian fighter jets in the worst fighting in more than two decades between the two nuclear-armed enemies.
"If the current friction between India and Pakistan escalates into a more serious conflict, gold is likely to attract increased safe-haven demand, which could support prices further," Vawda said.
Elsewhere, spot silver slipped 0.8% to $32.96 an ounce, platinum eased 0.2% to $983.06 and palladium steady at $974.43.
