02:00 PM EDT, 05/07/2025 (MT Newswires) -- (Updates prices.)

Gold traded lower mid-afternoon on Wednesday as the dollar rose and safe-haven demand slows after the United States and China agreed to hold trade talks this weekend.

Gold for June delivery was last seen down US$29.60 to US$3,393.20 per ounce.

The drop comes as the United States and China agreed to hold talks aimed at ending the tariff battle that has nearly ended all trade between the world's two largest economies. Negotiators will meet in Geneva on the weekend. The announcement of the talks more than offset concerns over the a potential war between India and Pakistan after the two nuclear-armed countries traded attacks on Tuesday.

"Attention shifted from India-Pakistan tensions to upcoming US-China trade talks in Switzerland. Having surged 6% in two sessions ahead of the Chinese market reopening, a setback was expected, and while trade talks may ease demand in the short term, a deal may still be difficult to strike," Saxo Bank noted.

The drop also comes ahead of the latest interest-rate decision from the Federal Reserve coming Wednesday afternoon. The Federal Open Market Committee is widely expected to leave rates unchanged but the market is awaiting its outlook as growth slows amid President Donald Trump's trade wars.

The dollar rose, with the ICE dollar index up 0.33 points to 99.56. Treasury yields were mixed, with the U.S. two-year note last seen up 1.4 basis points to 3.805%, while the yield on the 10-year note was down 2.9 points to 4.285%.