Gold set for second weekly gain as Ukraine crisis lifts appeal

Spot gold was down 0.2% at $1,992.94 per ounce, as of 0203 GMT

Gold prices were set for a second weekly gain as talks between Russia and Ukraine made little apparent progress, although bullion saw a dip on Friday as elevated US Treasury yields on the back of inflation data assuaged its safe-haven appeal.

Spot gold was down 0.2 per cent at $1,992.94 per ounce, as of 0203 GMT. US gold futures were flat at $2,000.10. Bullion gained about 1.2 per cent so far this week. There was no breakthrough in the first high-level talks between foreign ministers from Russia and Ukraine, who met in Turkey on Thursday since Moscow invaded its neighbour.

Benchmark US 10-year Treasury yields rose on Thursday and topped 2 per cent for the first time in two weeks after US inflation data confirmed rapidly rising prices, locking in expectations that the Federal Reserve will raise interest rates next week.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion. Investors took stock of the US inflation data, which was in line with expectations but also showed the biggest year-on-year increase since January 1982.

The European Central Bank took a hawkish turn on Thursday saying it would end its asset purchases this summer, paving the way for a rate hike later in the year. The US Federal Reserve is scheduled to announce its next policy statement on March 16.

Palladium, used by automakers in catalytic converters to curb emissions, was down 0.5 per cent at $2,914.78 per ounce. The metal hit a record high of $3,440.76 on Monday, driven by fears of supply disruptions from top producer Russia. Among other metals, spot silver shed 0.7 per cent to $25.70 per ounce, while platinum fell 0.6 per cent to $1,062.01 and was set for its worst weekly decline since November 2021.

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