Bullion prices fell nearly 2% to touch below $3,300 as the market mode turned positive with US President Donald Trump's decision to postpone tariffs on European Union (EU) goods.
The decision opened a positive trend for gold and the US dollar recovered its losses last week, providing little resistance to the yellow metal's price.
At 9.20 am, gold prices were at $3,307.09, up 0.19% since it opened in early trading on Wednesday in the Asian session.
Investors breathed a sigh of relief after talks between US President Donald Trump and European Commission President Ursula von der Leyen over the weekend led to the postponement of 50% tariffs on EU goods until July 9.
The development triggered a shift in market sentiment, seeing outflows from safe-haven assets except the US dollar and supporting a surge in global equities.
The Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose 0.62% to 99.54.
The gains were supported by a sharp rise in Consumer Confidence data, which the Conference Board (CB) said was the strongest growth in four years.
US economic data showed durable goods orders fell the most since October in April, driven by a sharp decline in business equipment.
The decline was linked to continued uncertainty over US tariffs and tax policy.
For the precious metals market, bullion's direction this week is expected to depend on the upcoming US economic docket.
Investors will be looking at the latest Federal Reserve (Fed) meeting minutes, the second estimate of Gross Domestic Product (GDP) for the first quarter of 2025, as well as the Fed's key inflation indicator, the Core Personal Consumption Expenditures (Core PCE) Price Index.
