Gold dipped overnight to its lowest in more than five weeks as the US dollar and equities prices rose on optimism about a possible trade deal between the United States and China, while platinum shed 3 per cent as investors took profits from a recent rally.

The world’s two largest economies appeared close to a deal that would roll back US tariffs on at least $US200 billion worth of Chinese goods, a source briefed on negotiations said on Sunday.

Spot gold was down 0.5 per cent at $US1,286.94 per ounce.

During the session gold fell as low as $US1,282.50, its lowest since January 25.

US gold futures fell for the sixth straight session, settling down 0.9 per cent at $US1,287.5 per ounce.

‘There is a risk-on (sentiment) in the markets with the positive US-China talk, so gold is naturally pulling back on strong equities, strong (US) dollar and good geopolitical news,’ said Bob Haberkorn, senior market strategist at RJO Futures.

US President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27, the Wall Street Journal reported on Sunday.

Global markets cheered a potential deal, as investors headed into riskier assets, dampening demand for gold.

The US dollar index measuring the greenback against other currencies rose to a 10-day high.

Rising US Treasury yields boosted demand for the currency.

‘It seems that investors’ appetite for gold has suddenly vanished,’ ActivTrades chief analyst Carlo Alberto De Casa said in a note.

‘From a technical point of view, the fall below $US1,300 is making space for further declines.’

On Friday, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.5 per cent, the biggest daily percentage fall since December 2016.

Platinum shed 2.5 per cent to $US835.35 an ounce.

The metal remained up more than 5 per cent for the year so far.

Palladium, which hit an all-time peak of $US1,565.09 last month, was down 1.2 per cent at $US1,527.01.

Both metals are undergoing a technical correction, with palladium still in overbought territory, analysts said, adding the US dollar’s advances also weighed.

Bank of America Merrill Lynch lifted its forecast for palladium, expecting it to hit a key $US2,000 level this year.

The bank said it expects platinum to average $US883 for the same period.

Silver fell 0.8 per cent to $US15.08 per ounce, having earlier declined to a more than two-month low of $US15.02.