Mubasher: Gold prices on Friday trimmed most of its early gains, after hitting their highest level in six months and half, as the US dollar and Asian shares regained some ground.

This came after China said it would hold talks with the US to resolve their trade dispute, amid fears of a global economic downturn.

By 8:49 am GMT, US gold futures went down 0.02% to $1,294.50 per ounce, while spot gold fell 0.19% to $1,291.77 per ounce.

A working team headed by Deputy US Trade Representative Jeffrey Gerrish would arrive in China to hold “positive and constructive discussions” with counterparts in Beijing, Chinese commerce ministry said in a statement on its website.

“The news on Sino-US trade talks is good for both US and China as the trade tension had taken a toll on all economic data,” SMC Comtrade commodity research assistant vice-president Vandana Bharti told Thomson Reuters.

The US dollar edged up on renewed optimism in the trade feud between Washington and Beijing, as Asian equities recovered on Friday.

Investors would focus on a discussion between US Federal Reserve Chair Jerome Powell and former Fed heads Janet Yellen and Ben Bernanke later in the day, looking for cues about interest rate hikes this year.

Markets are also awaiting the report on US non-farm payrolls due later in the day.

Amid recession worries, the Fed funds futures market is now pricing in a good chance of a rate cut by the end of this year, which is positive for the precious metal, New Delhi-based Adroit Financial Services portfolio management head Amit Kumar Gupta told Reuters.

Rising interest rates have a high impact on gold, as they lift the opportunity cost of holding non-yielding bullion.

Investors expected the US central bank to maintain its tightening policy after three rate hikes last year, yet the ongoing trade war and recent disappointing corporate earnings allayed those expectations.