Meanwhile, global stocks rallied to hit record highs after comments from U.S. President Donald Trump and Iran pointed to a de-escalation in military tensions, even as the U.S. increased sanctions on Iran.
“We are looking at the risk-on sentiment, a stronger dollar, and surging equities,” Stephen Innes, a market strategist at AxiTrader said.
“Besides the U.S. president suggesting that Iran is standing down, House Speaker Nancy Pelosi’s legislation to limit Trump’s executive powers against Iran is reducing the pressure in the Mideast.”
The U.S. House of Representatives on Thursday passed a resolution to stop Trump from further military action against Iran.
Gold, a safe asset during political and economic uncertainties, had surged over $1,600 on Wednesday after Iran launched missile strikes on U.S. forces in retaliation to the killing of its top commander in a drone attack.
Further weighing on gold, the dollar looked set to post its best week in two months.
Investors now await U.S. non-farm payrolls due at 1330 GMT and a ‘Phase 1’ trade deal between Washington and Beijing next week, which would further ease trade-related worries.
“Gold remains on the back foot in Asia ... as traders price out the geopolitical risk in precious metals,” Jeffrey Halley, a senior market analyst for the Asia-Pacific region at OANDA said in a note.
“A break of $1,540 implies that a deeper correction to $1,520 could occur.”
Indicative of sentiment, holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust, fell 0.5% to 882.12 tonnes on Thursday.
Elsewhere, palladium fell 0.2% to $2,102.47 an ounce, having hit a record peak of $2,149.50 in the previous session on supply woes. For the week, the metal was set to gain nearly 6%, its best week since mid-June.
Silver fell 0.2% at $17.85 per ounce and was down 1% so far this week, while platinum shed 0.2% to $964.10.
Reporting by Sumita Layek in Bengaluru; Editing by Arun Koyyur
© Reuters News 2019