Gold price slips from near six-week high as trade war fears recede

Gold slipped on Tuesday as risk appetite revived in global financial markets, lifting equities, but the precious metal was not far off a six-week high hit overnight as investors remained cautious over political tensions between Russia and the West. Stock markets jumped in response to reports the United States and China were negotiating to avert a trade war and this dented the appeal of gold, seen as a safe haven.

The dollar edged up versus a currency basket - making dollar priced gold costlier for non-US investors - though it was not far off a five week low hit earlier as returning risk appetite dented investor appetite for the U.S. currency. 

"There's going to be a few months of talks before uncertainty around global trade situation can be erased, and in the meantime gold will at times benefit," said Simona Gambarini, commodities economist at Capital Economics. "In the short term we definitely see gains (for gold)."

Spot gold was down 0.3 percent at $1,348.65 per ounce at 1023 GMT, after touching $1,356.66 earlier in the session, its highest since Feb. 16. US gold futures for April delivery fell 0.5 percent to $1,348.60 per ounce.

Moscow said on Tuesday it would respond harshly to a U.S. decision to expel 60 Russian diplomats over a nerve agent attack on a former Russian spy in Britain, but was still open to strategic stability talks with Washington.

"Gold prices continue to ratchet higher as the U.S. dollar weakens despite equity markets rebounding on easing concerns about the likelihood of a trade war between China and USA," Stephen Innes, APAC trading head at OANDA, said in a note.

"Realistically there are plentitudes of market turmoil in the making that continue to make gold the go-to place to hedge risk." 

China's net gold imports via main conduit Hong Kong plunged 35.5 percent in February from the previous month, data showed on Tuesday.

Holdings of SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 0.38 percent to 847.30 tonnes on Monday from 850.54 tonnes on Friday. 

In other precious metals, spot silver was flat at $16.66 per ounce after hitting a near 3-week high of $16.80 earlier in the session.

Platinum was up 0.2 percent at $956.50 per ounce, while palladium was 0.3 percent higher at $977.