Gold prices retreated further in Asian trading on Tuesday after slumping below $4,000 per ounce in the previous session, as signs of easing U.S.-China trade tensions reduced bullion’s safe-haven appeal ahead of a closely watched Federal Reserve meeting.

Spot gold was last down 0.4% at $3,963.6 an ounce by 01:58 ET (05:58 GMT), while U.S. Gold Futures declined 1% to $3,981.59/oz.

The yellow metal slipped over 3% to an over-two-week low on Monday. Prices have fallen about 10% from the record high of $4,381.29/oz reached just a week earlier.

Easing US-China tensions curbs bullion’s demand

The steep pullback came after negotiators from Washington and Beijing reached a preliminary trade framework during talks in Kuala Lumpur over the weekend.

The proposal aims to avert a new round of tariffs and sanctions and could pave the way for a breakthrough when U.S. President Donald Trump meets Chinese President Xi Jinping later this week.

Optimism around the talks has reduced demand for gold as a hedge against geopolitical risks.

“Even after (Monday’s) correction, gold is still up more than 50% this year, underpinned by strong ETF demand and central bank buying amid diversification,” ING analysts said in a recent note.

“The recent price pullback could even be seen by some central banks as a chance to increase their holdings,” they added.

Investors are now focused on the Fed policy meeting, which begins later today and is expected to end on Wednesday with a 25 basis-point rate cut.

While lower rates would typically boost gold by reducing real yields, much of the cut appears priced in, leaving limited upside for the metal in the near term.

Metal markets trade lower; copper slips after record peak

Other precious and industrial metals also traded lower on Wednesday amid a broader risk-on mood.

Silver Futures fell 0.6% to $46.49 per ounce, while Platinum Futures dropped 1.6% to $1,556.60/oz.

Benchmark Copper Futures on the London Metal Exchange slipped 0.6% to $10,948.95 a ton, while U.S. Copper Futures declined 0.8% to $5.12 a pound.

LME copper futures hit a record high of $11,052/ton on Monday.

“With supply disruptions stacking up and trade optimism growing, the outlook for copper is starting to look brighter,” analysts said.