- Fed sees rising risks to economy as it leaves rates unchanged
- US, Britain to announce trade deal on Thursday, New York Times says
- Pakistan vows retaliation after Indian strike over tourist deaths
May 8 (Reuters) - Gold reversed course on Thursday after reports of U.S. President Donald Trump signing a potential trade deal with Britain weighed on sentiment, while investors awaited the outcome of U.S.-China trade talks this weekend.
Spot gold was down 0.8% to $3,336.49 an ounce, as of 0618 GMT. The metal had risen more than 1% earlier in the session.
U.S. gold futures lost 1.5% to $3,342.40.
Trump is expected to announce a trade deal between the U.S. and Britain on Thursday, the New York Times reported on Wednesday.
"On trade deal front, any de-escalation of trade war and diminishing uncertain atmosphere would be negative for the yellow metal. If the U.S. announces trade deal with the UK would be positive for the overall global economy," said Jigar Trivedi, senior commodity analyst at Reliance Securities.
Trump also suggested China initiated the upcoming senior-level trade talks between the two countries and said he was not willing to cut import tariffs on Chinese goods to get Beijing to the negotiating table.
Meanwhile, the Federal Reserve held interest rates steady on Wednesday but said risks of higher inflation and unemployment had risen, as its policymakers grapple with the impact of President Donald Trump's tariffs.
"In our opinion the Fed may cut rates at September meeting and not before it," Trivedi said.
Non-yielding bullion, a safeguard against political and financial turmoils, thrives in a low-interest-rate environment.
Elsewhere, India struck Pakistan and Pakistani Kashmir on Wednesday over the tourist killings in Kashmir last month. Pakistan vowed to retaliate and said it shot down five Indian aircraft.
"If (tension) further escalates, then we might see gold continue to rise and maybe break the previous high that we've seen," said Brian Lan, managing director at GoldSilver Central, Singapore.
Bullion hit a record high of $3500.05 on April 22.
Spot silver eased 0.1% to $32.43 an ounce, platinum gained 0.2% to $975.75 and palladium fell 0.9% to $963.26.
Reporting by Anushree Mukherjee and Anmol Choubey in Bengaluru; Editing by Sumana Nandy, Rashmi Aich and Sonia Cheema
Source: Reuters