Gold prices edged higher on Wednesday after shedding nearly 1 per cent in the previous session, as some optimism about Britain's negotiations to leave the European Union ebbed, while a risk-on sentiment capped the bullion's gains.

Spot gold was up 0.2 per cent at $1,484.10 per ounce as of 0427 GMT. US gold futures were 0.3 per cent higher at $1,487.90 per ounce. “There are some uncertainties since there is a lot to go through on Brexit. For instance even if both EU and UK negotiators agree on terms it still has to go through the parliament,” AxiTrader market strategist Stephen Innes said.

However, a signed Brexit deal could push yields higher, which fundamentally are significant headwinds over the near term for gold, Innes added.

Markets are still awaiting the outcome of talks that dragged on late into Tuesday night to see whether Britain and the EU can draft an agreement on Brexit before a summit later this week. It also remained unclear if London could avoid postponing its scheduled departure on October 31. Officials involved in negotiations said that differences over the terms of the split had narrowed significantly.

However, Michel Barnier, EU negotiator, made it clear at a meeting of the bloc's ministers in Luxembourg that if an agreement could not be reached on Tuesday, it would be too late to send anything for leaders to approve at the summit in Brussels on Thursday and Friday.

Gold also found some support from fresh US-China strains over Hong Kong. The US House of Representatives on Tuesday passed four pieces of legislation taking a hard line on China, three related to the protests in Hong Kong. Beijing opposed the new measures and urged lawmakers to stop interfering.

So far the trade negotiations were going well between US and China, but if we see a flip over this issue we might see gold moving up, Phillip Futures analyst Benjamin Lu said. “Gold is still relatively range bound between $1,474 and $1,510.”

Meanwhile, Asian shares inched higher with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.4 per cent, while the dollar was slightly under pressure against a basket of six major currencies.

Among other precious metals, palladium rose 0.2 per cent to $1,736.56 an ounce, hovering near its record high of $1,739.93 hit on Tuesday. Silver rose 0.4 per cent higher to $17.44 per ounce and platinum was down 0.3 per cent at $886.15.

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