Gold prices fell on Monday as the dollar index gained and US Treasury yields held firm near multi-month highs, with investor focus on potential Russia-Ukraine peace talks this week further dimming bullion's safe-haven appeal.
Spot gold was down 0.7 per cent at $1,943.72 per ounce, as of 0426 GMT. US gold futures were down 0.5 per cent at $1,943.50. "Gold is falling after its rally stalled on Friday and the US dollar strengthened this morning in Asia. That is pushing nervous longs to the exit door," said OANDA senior analyst Jeffrey Halley.
The dollar index strengthened to its highest in more than one week, making gold more expensive for other currency holders. The dollar has benefited from its status as a safe haven and the conflict in Ukraine has driven expectations the US Federal Reserve will hike interest rates.
Helped by expectations of monetary tightening by the US Federal Reserve, yields on the US 10-year Treasury note firmed near multi-year highs, increasing the opportunity cost of holding zero-yield bullion. The Fed raised borrowing costs for the first time in three years last week, and traders are pricing in a probability of a 50-basis-points rate hike during the policy meeting in May.
Higher yields and interest rates increase the opportunity cost of holding non-yielding bullion.
With peace talks between Russia and Ukraine set to take place in Turkey this week, Ukrainian President Volodymyr Zelenskiy insisted on the territorial integrity of his country after earlier suggesting he was ready for a compromise.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5 per cent to 1,093.18 tonnes on Friday, their highest since late-February 2021. Spot silver fell 1.5 per cent to $25.13 per ounce and platinum shed 0.7 per cent to $995.03, while palladium added 1 per cent to $2,359.72.
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