Investing.com - Gold prices pulled back from the 10-month high they hit on Thursday, after the minutes from the Federal Reserve's last meeting revived expectations for a possible U.S. rate hike this year.
The Fed, in the minutes of its latest meeting in January, said the U.S. economy and its labor market remained strong, prompting some expectations of at least one more interest rate hike this year.
Higher interest rates make gold less attractive since it does not pay interest and investors incur costs for both storing and insuring it.
Signs that the U.S. and China would hammer out an agreement resolving their protracted trade war also weighed on gold, encouraging flows out of haven assets. Stock indexes and crude oil hit new highs for the year on news of progress made by the two sides.
Negotiators are drawing up six memorandums of understanding on structural issues: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade, Reuters cited two sources familiar with the progress of the talks as saying.
Comex gold futures were down $9.85, or around 0.7%, at $1,338.10 a troy ounce by 7:40AM ET (12:40 GMT). The yellow metal rose to $1,349.80 on Wednesday, the highest level since May 2018.
Meanwhile, spot gold was trading at $1,335.47 per ounce, down $2.95, or roughly 0.2%.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was at 96.33, well off a two-week low of 96.12 reached in the previous session.
In other metals trading, silver futures sank 27.5 cents, or about 1.7%, to trade at $15.90 a troy ounce.
Meanwhile, palladium futures dropped 1.5% to $1,439.80 an ounce. The metal had surpassed the crucial $1,500 psychological level the previous session, on market supply woes. Copper, meanwhile, was retracing after surging to an eight-month high on Wednesday.
-- Reuters contributed to this report