Gold Dips to $1,900 as Russia-Ukraine Peace Talks Advance
Gold plunged back below the US$1,900 mark for the first time in a month, falling for a third straight session as hopes for successful peace talks between Ukraine and Russian cut safe-haven buying of the metal.
Market data shows that Gold for June delivery was last seen down US$49.10 to US$1,895.60 per ounce, falling under US$1,900 for the first time since Feb.25 as demand continues to slow down.
The drop came after Russia said it will reduce military activity around the Ukrainian cities of Kyiv and Chernihiv as peace talks between the two countries began in Turkey. Other commodities also retreat while oil gave up early gain.
Alexander Fomin, Russia’s deputy defense minister, said the country will “drastically reduce” military activity around the two Ukrainian cities “in order to increase mutual trust and create the necessary conditions for further negotiations”, according to a Washington Post report, following the start of peace talks.
Ukraine offered to remain neutral in exchange for security guarantees. READ: IMF Says Russia-Ukraine Crisis to Impact Africa Economy
“Some market participants apparently have high hopes of the talks that will be taking place between Russia and Ukraine in Istanbul today. This is presumably why gold was in less demand yesterday. If the talks prove to be inconclusive yet again, however, we believe gold is likely to start climbing again,” Commerzbank analyst Daniel Briesemann said in a note.
The US dollar also weakened following the Russian comments, making gold more affordable for international buyers. The ICE dollar index was last seen down 0.85 points to 98.24. Bond yields also eased, supportive of gold since it offers no interest. The US 10-year note was last seen paying 2.445%, down 2 basis points.
Moscow’s decision to drastically cut its military activity signals hopes for an end to the conflict now in its second month lifted risk sentiment in wider financial markets. Benchmark 10-year bond yields held firm near multi-year highs on bets for aggressive interest rate hikes by the Federal Reserve to fight soaring inflation.
Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion. At the same time, spot palladium dropped 5.1% to $2,120.56 per ounce, after falling to its lowest level since Jan. 21 at $2,032.97 earlier in the session
#Gold Dips to $1,900 as Russia-Ukraine Peace Talks Advance
