Gold steady on weaker dollar, caution on Ukraine

Palladium recovers from two-month low.

Gold steadied on Wednesday, buoyed by a weaker dollar and a slight pullback in U.S. bond yields, while investors awaited more details from Russia-Ukraine talks in Turkey.

Spot gold was nearly flat at $1,918.62 per ounce at 0947 GMT. U.S. gold futures rose 0.3% to $1,923.10.

On Tuesday, gold prices dropped as much as 1.8% to their lowest level since February 28 on signs of progress in negotiations between Russia and Ukraine before recovering to close only 0.2% lower on the day.

“The war premium seems to be eroding out of the gold price to some extent,” independent analyst Ross Norman said, adding gold’s strong bounce off $1,890 was encouraging.

Russia on Tuesday pledged to cut down on military operations around Kyiv and in northern Ukraine. However, Ukraine and its Western allies dismissed a Russian military pullback from near Kyiv as a ploy to refit troops after heavy losses.

City Index senior market analyst Matt Simpson said investors remain wary of Russia’s intentions.

The U.S. dollar fell 0.5% to a near two-week low against its rivals, making greenback-priced gold less expensive for other currency holders.

Yields on the benchmark U.S. 10-year Treasury note also eased, reducing the opportunity cost of holding zero-yield bullion.

The U.S. Treasury yield curve inverted on Tuesday for the first time since 2019, as investors priced in an aggressive rate-hiking plan by the Federal Reserve as it attempts to bring inflation down from 40-year highs.

Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, slipped 0.2% to 1,091.44 tonnes on Tuesday.

Spot silver rose 0.1% at $24.76 per ounce and platinum was nearly steady at $982.44.

Palladium gained 1.6% to $2,182.48, after dipping to a more than two-month low of $2,032.97 in the last session.

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