Gold clawed back from a 19-month low on Thursday due to short-covering and as the US dollar softened following news that Beijing will hold trade talks with Washington later this month.

A Chinese delegation led by Vice Minister of Commerce Wang Shouwen will meet with US representatives led by Under Secretary of Treasury for International Affairs David Malpass, the Ministry of Commerce said, offering a glimmer of hope for progress in resolving a conflict that has set world markets on edge.

The news moved the dollar further away from a 13-month peak as risk aversion eased. Spot gold was up 0.1 per cent at $1,175.07 an ounce as of 0726 GMT. US gold futures were, however, down 0.2 per cent at $1,182.1.

Earlier in the session, amid a broad commodity sell-off and some stop-loss selling spot prices fell as much as 1.2 per cent to $1,159.96, the lowest since January 2017, traders said.

“We expect interest in the precious metal to rekindle as the strength in the USD fades. But that might be a bit of a while yet,” said John Sharma, an economist at National Australia Bank.

Gold prices, which have largely been pressured by a strong dollar and rising US interest rates, have shed nearly 10 per cent in 2018.

“The market has come down $50-$60 in a short period, so it is not surprising to see a little short-term recovery,” said a Sydney-based trader.

“We are higher this afternoon but I don't think prices have stabilised here. There's a lot of volatility and the market is still under pressure.”

Bullion has also lost its appeal as a safe-haven over the past few months as investors preferred to park assets in the dollar and Treasuries. Asian shares also pulled away from one-year lows after news of the trade talks, although Turkey's currency crisis and fears of an economic slowdown in China kept most markets in the red.

In an ongoing dispute with Turkey, which has roiled financial and currency markets, the United States had on Wednesday ruled out removing steel tariffs, even if Ankara frees a US pastor, as Qatar pledged $15 billion in investment to Turkey, supporting a rise in the Turkish lira.

Some emerging markets pared their holdings of US Treasuries in June, data from the US Treasury department showed on Wednesday, in what analysts viewed as a move to support their currencies as the Federal Reserve started raising interest rates this year.

Higher US rates tend to boost the dollar and bond yields, adding pressure on greenback-denominated, non-yielding gold. Meanwhile, spot silver was up 0.7 per cent at $14.52 an ounce after earlier hitting the lowest since February 2016 at $14.30.

Platinum was 1.8 per cent higher at $776.50, after earlier sinking to its lowest since October 2008 at $751.25. Palladium rose 1.8 per cent to $857.22 an ounce, having hit an over 13-month low at $832 earlier.

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