Gold edged up on Tuesday from a 2018 low, adding traction as the dollar fell off its five-month high, though risk appetite in the broader financial markets kept the precious metal's gains in check.

The dollar lost momentum following a broad rally prompted by rising US bond yields and the prospect of a resolution to US-China trade tensions. A weaker dollar makes dollar-priced gold cheaper for non-US investors.

Washington and Beijing had both claimed victory on Monday as the world's two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost US exports to China.

“This quarter and maybe going into next, gold will continue to struggle but the (positive) views on the US economy are overdone,” said Philip Newman, director at Metals Focus.

“There are concerns over sizeable US debt, there's the (US) mid-term elections in November, there's enough out there that could see the dollar eventually weaken and gold prices start to improve through the back end of this year.”

Spot gold had edged up 0.2 per cent to $1,294.81 per ounce by 1011 GMT. In the previous session, it slid to $1,281.76, its lowest since December 27. US gold futures for June delivery rose 0.3 per cent to $1,294.30 per ounce.

Capping gains in gold, European shares inched to a near four-month high as an easing of pressure on Italian markets coincided with China's latest move to open its giant economy to the rest of the world. Gold, seen as a safe haven, tends to weaken when there is strong investor appetite for equities, seen as risky assets.

“The overriding narrative here is where the dollar is going,” said Stephen Innes, APAC trading head at OANDA. Abating geopolitical risk was also weighing on sentiment for gold, he added.

Meanwhile, expectations that the Federal Reserve will lift US interest rates again next month added to downward pressure on gold. Higher US rates tend to boost the dollar and push bond yields up, making non-yielding assets such as bullion less attractive.

“Somewhere around the $1,275 level we are going to start to attract more bullish sentiment, but in the meantime the driver is going to remain the U.S. dollar,” Innes said.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.38 per cent to 852.04 tonnes on Monday. Silver rose 0.7 per cent to $16.60 an ounce, while palladium fell 1.4 per cent to $975.72 an ounce. Platinum climbed 1.2 per cent to $907.10 an ounce, after marking a low for the year in the previous session at $873.50.

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