May 27 (Reuters) - Gold prices declined for a second consecutive session on Tuesday, as risk sentiment improved following U.S. President Donald Trump's decision to postpone tariffs on the European Union.
Spot gold fell 1.2% to $3,302.10 an ounce by 02:03 p.m. ET (1802 GMT) after rising nearly 5% last week.
U.S. gold futures settled 1.9% lower at $3,300.40.
"There is a lot of volatility in gold prices as we keep having things change on the tariff front. Currently, the market may be under the impression that there is a deal to be had and that is pressuring gold," Bart Melek, head of commodity strategies at TD Securities, said.
A weekend telephone call between Trump and EU chief Ursula von der Leyen gave "new impetus" to trade talks, the EU said, after Trump dropped his threat to impose 50% tariffs on imports from the European Union next month.
The U.S. dollar strengthened and stock index futures surged. A stronger dollar and rising risk sentiment weighed on gold, a dollar-denominated asset typically favoured during periods of economic and geopolitical uncertainty.
Federal Reserve Bank of Minneapolis President Neel Kashkari called for keeping interest rates steady until there is more clarity on how higher tariffs affect inflation.
The minutes from the Fed's latest policy meeting are set to be released on Wednesday. Key U.S. economic data scheduled for release this week include the first-quarter GDP estimate, weekly unemployment claims, and the core PCE price index.
"Our longer term bullish view on gold has not changed. As soon as the market believes that the Fed is going to cut (rates), gold will start doing well," Melek added.
Zero-yield bullion tends to do well in a low-interest rate environment.
Elsewhere, spot silver slipped 0.4% to $33.21 per ounce, platinum fell 0.1% to $1,084.02 and palladium dropped 1.2% to $975.49.
Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Maju Samuel and Vijay Kishore
