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Gold prices fell further on Wednesday, weighed down by signs of easing U.S.-China trade tensions and as investors took advantage of bullion's recent record rally to take profits while awaiting U.S. inflation data due later this week.

Spot gold was down 0.4% at $4,109.19 per ounce, as of 0236 GMT. Bullion fell more than 5% on Tuesday in its steepest fall since August 2020.

U.S. gold futures for December delivery climbed 0.4% to $4,124.10 per ounce.

"Simmering of trade tensions between the U.S. and China was the snowflake which caused the avalanche and reversal of gold's momentum trade," said StoneX senior analyst Matt Simpson.

"This is simply a technical repositioning on a market that clearly needed a pullback after an extended move above $4,000. I suspect we've seen the worst of the day-to-day volatility as dips will still likely be bought."

U.S. President Donald Trump said he expected to reach a fair trade deal with Chinese President Xi Jinping when the two meet next week in South Korea, and played down the risks of a clash over the issue of Taiwan.

New Delhi and Washington are nearing a long-stalled trade agreement that would reduce U.S. tariffs on Indian imports to 15% to 16% from 50%, India's Mint newspaper reported.

Gold prices have risen about 56% this year, reaching an all-time peak of $4,381.21 on Monday, bolstered by geopolitical and economic uncertainties, rate-cut bets and sustained central bank buying.

Investors now look forward to the release of the September U.S. consumer price index report on Friday for more cues on the Federal Reserve's interest rate-cut path. The report has been delayed due to the U.S. government shutdown.

The Fed will lower its key interest rate by 25 basis points next week and again in December, according to a Reuters poll of economists who remain deeply divided on where rates will be by the end of next year.

Elsewhere, spot silver edged 0.1% higher to $48.82 per ounce, platinum slipped 1.5% to $1,528.15 and palladium gained 0.7% to $1,418.09.