Gold prices fell as much as 2.1% after the United States and China announced plans for trade talks in Switzerland, which reduced demand for traditional safe-haven assets.
The drop came after a sharp rally of nearly 6% over the prior two days, a rebound that had driven prices higher amid earlier market uncertainty.
Even though military tensions between India and Pakistan intensified, investor attention shifted toward the prospect of improved global trade relations, which helped dampen the appeal of gold as a refuge.
Year to date, gold has climbed roughly 30% and hit a record high above $3,500 in April. Market participants are also watching the Federal Reserve, which is widely expected to hold interest rates steady at its next policy meeting—an outlook that can influence bullion demand and price direction.