PRECIOUS-Gold nears three-week low as US-China trade optimism dents safe-haven demand

By Brijesh Patel

Oct 28 (Reuters) - Gold prices extended losses on Tuesday to a near three-week low, as optimism over a potential U.S.-China trade deal dented demand for safe-haven bullion, while investors looked forward to major central bank policy announcements this week.

Spot gold XAU= was down 1% at $3,941.65 per ounce, as of 0652 GMT, hitting its lowest level since October 10.

U.S. gold futures GCcv1 for December delivery lost 1.5% to $3,957.50 per ounce.

"A de-frosting of U.S.-China trade relations has somewhat pulled the rug out from under the gold price due to a decline in safe-haven buying flows," said KCM Trade Chief Market Analyst Tim Waterer.

On Sunday, top Chinese and U.S. economic officials hashed out the framework of a trade deal for U.S. President Donald Trump and his Chinese counterpart Xi Jinping to decide on later this week.

"If Trump and Xi have a productive meeting on trade this week, this could leave gold swimming against the current to some degree. But this could be offset if the Fed delivers a dovish tone with the expected rate cut this week," Waterer said.

Trump said he thought a deal would be reached with China, and announced a flurry of deals on trade and critical minerals in Malaysia with four Southeast Asian nations during the first stop of his five-day Asia trip.

Asian shares consolidated recent hefty gains on Tuesday as hopes for a thawing in global trade tensions kept risk appetite keen. MKTS/GLOB

With the U.S. Federal Reserve widely expected to cut interest rates at the end of its policy meeting on Wednesday, investors are awaiting any forward-looking language from Fed Chair Jerome Powell.

Meanwhile, the European Central Bank and the Bank of Japan are both broadly expected to hold rates steady later this week.

Gold prices have gained about 53% this year, reaching an all-time peak of $4,381.21 on October 20, bolstered by geopolitical and economic uncertainties, rate-cut bets and sustained central bank buying.

Elsewhere, spot silver XAG= fell 0.8% to $46.51 per ounce, platinum XPT= slipped 2.6% to $1,549.85 and palladium XPD= lost 1.2% to $1,385.50.

Reuters Terminal users can see related news and prices by clicking on the codes in brackets:
All precious metals headlines           GOL
Precious metals market reports          GOL/
European gold prices                    GOLD/EU1GOLD/EU20#PREC
London Bullion Market Association       LBMA01
New York Comex gold 0#GC: and silver  0#SI:
New York platinum 0#PL: and palladium 0#PA: