US gold futures settled down 2.2% at $1,525.90 per ounce. Platinum also declined about 2.3% to $963 per ounce, after touching a low for the day at $940.50. Data showing US private employers' payrolls rose and the growth of the US services sector accelerated in August boosted stock markets, which were already buoyed by positive signs on US-China trade. "The gold market trading at highs was ambushed by strong US data from ADP to ISM; the data also savaged a frothy bond market, which helped drive the slide in gold," said Tai Wong, head of base and precious metals derivatives trading at BMO.
Driving hopes of a thaw in the protracted dispute between the world's two largest economies, China's Commerce Ministry confirmed high-level trade discussions with the United States set for early October. "The risk sentiment that was sparked by the ebbing trade situation is leading gold market participants to take some of their bets off," said Daniel Ghali, commodity strategist at TD Securities.
The changes in gold and Treasury yields are both symptoms of the same economic circumstances, Ghali said. "The longer yields are rising because growth expectations are." Palladium was the sole gainer, rising 0.6% to $1,562.93 per ounce, having hit its highest level in more than 1-1/2 months at $1,567.68 earlier in the session.