Gold prices fell to a three-week low near $3,950 and are set to extend their declines amid positive US-China trade talks that have cooled the heat.
Market participants will be looking ahead to the US Fed's interest rate decision early tomorrow morning.
At 9.15 am, gold was at $3,974, up 0.59% since it opened in early Asian trading on Wednesday.
Bullion retreated from its record highs on profit-taking after weeks of surges, followed by easing US-China trade tensions.
US President Donald Trump said he expects to reach a trade deal with China in the coming days. US and Chinese officials said on Sunday they had reached a preliminary agreement for Trump and Chinese leader Xi Jinping to try to finalize during a key meeting on Thursday.
The meeting between the world's two giants is likely to dampen gold prices for now.
On the other hand, growing bets on a Fed rate cut could limit the bottom for the precious metal.
The US central bank is widely expected to cut its benchmark interest rate by 25 basis points at the end of its October meeting on Wednesday. This would take the Federal Funds Rate target to 3.75%-4.00%.
This would be the second consecutive rate cut, following the September policy meeting.
Lower interest rates could reduce the opportunity cost of holding gold and could boost its price.
