2018.05.2101:33:00UTC+00Gold Prices Drop as U.S. Treasury Secretary Says Trade War with China 'on hold'

Gold prices fell on Monday as the dollar climbed and demand for safe-haven assets eased after U.S. Treasury Secretary Steven Mnuchin said the U.S. trade war with China was “on hold”.

Spot gold lost 0.2 percent at $1,289.30 an ounce.

U.S. gold futures for June delivery were down 0.2 percent at $1,289.20 per ounce.

The dollar index, which measures the greenback against a basket of six major currencies, climbed to a five-month high of 93.860 early Monday.

U.S. stock futures jumped on Monday as Mnuchin said the U.S. trade war with China was "on hold" after the world's two biggest economic powers agreed to drop their tariff threats while they work on a wider trade agreement.

Mnuchin and U.S. President Donald Trump's top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future.

The price of gold fell below the psychologically important $1,300 per ounce level last week for the first time since late December and has since continued to trade below its 200-day moving average.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings were down 0.10 percent at 855.28 tonnes on Friday from 856.17 tonnes on Thursday.

Hedge funds and money managers trimmed their net long position in COMEX gold contracts in the week to May 15, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Gold discounts in India widened to the highest level in almost two months this week due to sluggish demand amid high local rates, while buying in other major Asian centres ticked up as global prices slid to 2018 lows.