Gold bounces up on hopes for U.S.-China trade talks

Gold prices rose on Tuesday, reversing early losses as the Chinese yuan strengthened against the dollar after a report said the United States and China were trying to restart negotiations to defuse a trade war.

In early trade, a stronger dollar and rising U.S. interest rates had sent bullion falling to its lowest in a week and a half.

Spot gold rose 0.3 percent to $1,224.48 per ounce by 1:43 p.m. EDT (1743 GMT), rebounding after touching its lowest since July 19. The precious metal is heading for a 2 percent monthly decline.

U.S. gold futures for August delivery settled up $2.40, or 0.2 percent, at $1,223.70 per ounce.

The Chinese yuan had been weakening against the dollar, pressuring greenback-denominated gold. That pressure abated, providing gold some support, McKay added.

The dollar was slightly higher versus a currency basket, following a three-month streak of gains, with the U.S. Federal Reserve set to reaffirm the outlook for further gradual rate rises at the end of its two-day monetary policy meeting on Wednesday.

Higher U.S. interest rates tend to boost the dollar, making dollar-priced gold more expensive for holders of other currencies.

Meanwhile, silver gained 0.3 percent at $15.53 an ounce, poised to end the month down more than 3 percent.

Platinum rose 2.1 percent to $841.10 per ounce, headed for a monthly decline of less than 1 percent. Palladium increased 0.7 percent at $935.30, set to end July down about 2 percent.

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