Gold set for second weekly gain as Ukraine crisis lifts appeal

March 11: 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 U.S. Treasury yields on the back of inflation data assuaged its safe-haven appeal.

FUNDAMENTALS

* Spot gold was down 0.2% at $1,992.94 per ounce, as of 0203 GMT. U.S. gold futures were flat at $2,000.10.

* Bullion gained about 1.2% 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 U.S. 10-year Treasury yields rose on Thursday and topped 2% for the first time in two weeks after U.S. 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 U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.

* Investors took stock of the U.S. 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 U.S. 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% 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% to $25.70 per ounce, while platinum fell 0.6% to $1,062.01 and was set for its worst weekly decline since November 2021.