(Adds comments, updates prices for AMERS morning session)

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U.S President Trump says potential deals with India, Japan and South Korea in the works

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Gold's downside target at $3,136/oz, then $3,073- analyst

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U.S. producer price index data due on Thursday

By Sarah Qureshi

May 14 (Reuters) - Gold prices dropped more than 2% on Wednesday, hitting an over

one-month low, as rising trade optimism boosted risk appetite, leading investors to shift away

from bullion.

Spot gold slipped to its lowest since April 11, shedding 1.8% to $3,188.52 an ounce,

as of 1011 ET (14:10 GMT). Bullion fell as low as $3,174.62 earlier in the session.

U.S. gold futures eased 1.7% to $3,192.80.

"The global relief rally sparked by the steep reduction in U.S.-China tariffs has triggered

a correction through technical levels in gold," said Tai Wong, an independent metals trader.

Wall Street's main indexes opened higher, driven by the tariff deal and on expectations of

more trade agreements.

Washington and Beijing agreed to reduce tariffs drastically and adopted a 90-day pause while

the details are being worked out.

U.S. President Donald Trump, in an interview on Tuesday, said he could see himself dealing

directly with Chinese President Xi Jinping on details of a trade pact. He also said that

"potential deals" with India, Japan and South Korea were in the works.

Gold, known as a safe haven in times of geopolitical and economic turmoil, scaled a record

high of $3,500.05 last month. Prices are up 21.6% so far this year.

"While the long-term trend is still bullish, I wouldn't be surprised if the bearish momentum

continued for a few more days," said Fawad Razaqzada, market analyst at City Index and

FOREX.com.

"The first downside target is at $3,136, followed by $3,073 and then, the big level of

$3,000."

Traders now await the U.S. producer price index (PPI) data, due on Thursday, after

softer-than-expected consumer data, for cues on the Federal Reserve policy path.

Lower interest rates increase bullion's appeal as it is a zero-yielding asset.

Spot silver fell 1.8% to $32.29 an ounce, platinum shed 0.5% to $983.42,

meanwhile palladium rose 0.1% to $957.65.