LONDON: Gold extended its slide on Tuesday as ceasefire talks between Russia and Ukraine reduced demand for safe-haven assets, while bets that the US Federal Reserve may raise interest rates for the first time in three years added to pressure on gold.
Spot gold was down 1.2% at $1,928.58 per ounce, as of 1032 GMT, after earlier touching its lowest since March 3 at $1,924.56.
US gold futures fell 1.5% to $1,930.70.
“Some faint hopes that talks between Ukraine and Russia may somehow lead to a de-escalation has affected safe-haven demand for gold,” ActivTrades senior analyst Ricardo Evangelista said.
While gold is seeing a bit of a lull, the Ukraine situation is still unfolding, with market volatility and uncertainty likely to remain quite high, Evangelista added.
Gold prices are set to fall for a third straight session, which could be their longest losing streak since late January.
The Fed is expected to raise borrowing costs by a quarter of a percentage point at the end of its two-day meeting on Wednesday.
The impending announcement has kept US 10-year treasury yields elevated and put pressure on gold since rising US interest rates increase the opportunity cost of holding non-yielding bullion.
“The first rate hike move from the US quite often signals a low point in gold, so we’ll see what kind of signal they send tomorrow, and how hawkish their statement is, which will probably determine the short-term outlook from here,” said Saxo Bank analyst Ole Hansen.
Meanwhile, spot palladium was up 1.7% at $2,428.72 per ounce, after its weakest session in two years on Monday on easing supply fears. Palladium is a notoriously low-liquidity market, Hansen said, and with the war premium being taken out of commodity markets, palladium has not been shielded.
Spot silver shed 1.8% to $24.58 per ounce, while platinum slipped 1.8% to $1,012.04.