Spot gold fell 1.1 pc to $1,393.59 per ounce at 10:54 a.m EDT (1458 GMT), after falling to its lowest since June 20 at $1,381.51.

US gold futures dropped 1.2 pc to $1,396.60.

The United States and China agreed on Saturday to resume trade negotiations after President Donald Trump offered concessions to his Chinese counterpart Xi Jinping when the two met at the sidelines of the G20 summit in Japan.

The news drove a rally in global stocks and sent the dollar index to the highest in more than a week, limiting flows into safe-haven bullion.

"Under the positive (geopolitical) circumstances, the dollar is rallying and that is having a negative effect on gold...The poor picture on the technical charts is also causing some additional selling today," said Rob Lutts, chief investment officer at Cabot Wealth Management.

A break below $1,350 could paint a bearish picture, he added.

Gold prices hit a six-year high last week at $1,438.63 an ounce, driven by a dovish outlook from major central banks and an escalation of tensions between the United States and Iran.

The metal has shed about $50 dollars since it broke the $1,400 level but some analysts see it as a healthy correction and an opportunity to buy.

"We do not expect gold to fall significantly further.

In our view, it is above all the upcoming European Central Bank and Fed rate cuts, and the political risks, that argue against any pronounced and lasting price slide," Commerzbank analysts said in a note.

Meanwhile, holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22pc on Friday. Holdings had still risen nearly 7pc in June as of last week.

Among other precious metals, silver fell 0.33 pc to $15.26 per ounce, while palladium rose 0.93 pc to$1,552.25.

Platinum gained 0.69 pc to $838.76 per ounce, after hitting a six week high of $846.11 earlier in the session.