2018.05.2201:40:00UTC+00Gold Prices Drop, Weighed Down by Stronger Dollar

Gold prices edged down on Tuesday, wavering near a 2018 low that was reached during the previous session amid a stronger dollar and optimism in global markets, which reduced appetite for the safe-haven metal.

Spot gold lost 0.1 percent at $1,290.66 an ounce. The precious metal fell to $1,281.76 during the session earlier, its lowest since Dec. 27.

U.S. gold futures for June delivery fell 0.1 percent to $1,290.10 an ounce.

The dollar traded below a five-month high against a basket of currencies on Tuesday, catching its breath after a broad rally inspired by rising U.S. bond yields and relief at an easing of U.S.-China trade tensions.

Washington and Beijing both claimed victory on Monday as the world's two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China.

Expectations that the Federal Reserve will hike U.S. interest rates again next month added to downward pressure on gold. Higher U.S. rates tend to boost the dollar and push bond yields up, make non-yielding assets like bullion less attractive.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.38 percent to 852.04 tonnes on Monday.

Among other precious metals, silver and palladium were both little changed at $16.47 an ounce and $989.70 an ounce, respectively. Platinum climbed 0.1 percent at $897 an ounce, after hitting a new low for the year in the previous session at $873.50.