Gold prices pulled back on Wednesday after hitting a five-week high, as investors locked in profits and the United States dollar rebounded amid renewed optimism over American trade negotiations with Japan and Canada.
By 3:35 pm AEST (5:35 am GMT), spot gold was down US$11.62, or 0.3%, to US$3,419.75 per ounce.
Earlier in the session, the precious metal touched an intraday high of US$3,439 before reversing lower at a key resistance level.
The U.S. dollar strengthened on the back of upbeat sentiment surrounding international trade developments, curbing demand for safe-haven assets like gold.
President Donald Trump announced early Wednesday that the United States had finalised what he described as a "massive" trade agreement with Japan, calling it "perhaps the largest deal ever made".
Japan’s chief negotiator, Ryosei Akazawa, confirmed the development on social media, writing “Mission Complete”.
Meanwhile, Canadian Prime Minister Mark Carney said Tuesday, “We're working positively for a trade deal with Trump”, adding to the upbeat tone in markets.
The improved risk appetite in Asian markets, driven by signs of easing global trade tensions, reduced demand for gold as a hedge against uncertainty.
However, investors remain cautious due to the lack of specific details about the trade agreements and in anticipation of Alphabet Inc.’s earnings report after the U.S. market closes Wednesday.
Further weighing on sentiment was political instability in Japan. Japanese newspaper Mainichi reported growing expectations for Prime Minister Shigeru Ishiba to resign by the end of August after his ruling Liberal Democratic Party (LDP) suffered a loss in the Upper House election on Sunday.
