By Renita D. Young and Zandi Shabalala
NEW YORK/LONDON (Reuters) - Gold edged lower on Thursday under pressure from a stronger dollar and in response to easing trade tensions after the United States agreed to refrain from imposing tariffs on cars from the European Union.
The two sides will also begin talks to cut other trade barriers, they announced on Wednesday following a meeting at the White House.
Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade.
Spot gold dropped 0.4 percent to $1,225.89 an ounce by 1:34 p.m. EDT (1734 GMT), after it rose 0.6 percent on Wednesday. Earlier in the session, the metal hit $1,235.16, its highest in more than a week.
U.S. gold futures for August delivery settled down $6.10, or 0.5 percent, at $1,225.70 per ounce.
"The rise is partially to do with the news that Trump and the EU called a ceasefire on the trade war and a halt on auto tariffs," said Natixis precious metals analyst Bernard Dahdah.
"But gold has been dropping since April so there is a bigger story behind this fall rather than just the EU-US story at the moment."
Gold is currently trading about 10 percent off its April high due to pressure from a stronger dollar, which has risen around 5 percent in that time.
The U.S. currency rose 0.2 percent on Thursday.
"Even though the drivers are currency movement, the physical market is also very soft," said Suki Cooper, precious metals analyst at Standard Chartered Bank.
"In September, we're likely to see a better flow for prices. Physical prices will set a floor and investment demand will drive prices higher."
The MSCI world equity index rose to its highest since March, signaling investor demand for higher risk assets.
Meanwhile, the European Central Bank reaffirmed that it will end its stimulus program this year, saying the risks from an unpredictable global trade conflict did not warrant any deviation from its plan.
Investors are also watching out for second-quarter U.S. economic growth data, which is expected on Friday.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund fell 0.29 percent to 800.20 tonnes on Wednesday.
Among other precious metals, silver lost 0.5 percent at $15.48 an ounce, after earlier hitting its highest since July 17 at $15.67 an ounce.
Palladium dropped 0.4 percent at $934.97 an ounce. It touched an over one-week high at $941.10 in the previous session.
Platinum was 0.9 percent lower at $832.60 an ounce.
(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Elaine Hardcastle and Tom Brown)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Updated Date: Jul 27, 2018 00:06:05 IST