(MENAFN) Gold prices dropped by roughly 3.2% on Monday, reaching $3,981, following indications of reduced trade friction between the US and China and the finalization of new trade agreements with multiple Asian nations.

Signals from US President Donald Trump about a potential softening of trade tensions with China have contributed to declines in gold over the past few days.

The precious metal previously reached a record high of $4,381.6 last Monday, driven by escalating trade conflicts between the world's two largest economies, anticipation of interest rate cuts by the Federal Reserve, and central banks increasing their gold reserves.

However, after Trump's statements about reaching a "fair deal" with Beijing, amid threats of 100% tariffs in response to China's restriction on rare earth exports, gold prices sharply fell.

Additionally, Trump’s three-nation Asia tour, which included signing new trade agreements with Cambodia and Thailand, further pressured gold prices.

A high-level meeting between US President Donald Trump and Chinese President Xi Jinping is set to take place in South Korea on Thursday.

Analysts expect the discussions to ease tensions that have been particularly intense over the last fortnight.

Meanwhile, silver also experienced a decline, with the ounce price dropping 4.3% to $46.5 on Monday.

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