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PRECIOUS-Gold falls more than 1% as U.S. yields, dollar rise

 (Adds comments, updates prices)
    * Dollar near more than one-week high
    * U.S. 10-year bond yields near multi-year highs
    * Russia-Ukraine peace talks due this week in Turkey
    * Palladium slips to two-month low

    By Brijesh Patel
    March 28 (Reuters) - Gold prices dropped more than 1% on
Monday as a spike in U.S. Treasury yields, a stronger dollar and
hopes of progress in Russia-Ukraine peace talks dented demand
for the safe-haven metal.
    Spot gold        was down 0.87% to $1,940.46 per ounce by
1234 GMT. U.S. gold futures        dropped 0.9% to $1,940.46.
    "Adding to the woes for gold at the moment, we got
significant dollar strength and significant increases in the
10-year Treasury yields," said Ross Norman, an independent
analyst.
    "We've seen a large part of the war premium in gold already
taken out, but maybe there's a little further to go. So, gold is
currently facing significant headwinds on all three fronts."
    Benchmark U.S. 10-year yields rose above 2.5% to their
highest level since May 2019 as bets of big interest rate hikes
by the Federal Reserve to fight soaring inflation hammered bond
markets.      
    Gold is highly sensitive to rising U.S. interest rates, as
they increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar in which it is priced.
    The dollar index rose to more than a one-week high, making
gold more expensive for other currency holders.       
    With peace talks between Russia and Ukraine set to take
place in Turkey this week, Ukrainian President Volodymyr
Zelenskiy has insisted on the territorial integrity of his
country after earlier suggesting he was ready for a compromise.
            
    Palladium        was down 4.2% to $2,239.14 per ounce, after
falling to its lowest level since Jan. 25 at $2,157.99. The
auto-catalyst metal has lost nearly 34% since scaling a record
high of $3,440.76 on March 7.
    "On palladium, despite the airspace closure between Russia
and the U.S. and Europe, alternate routes allow Russia still to
export palladium. So I guess some supply disruption concerns are
vanishing," UBS analyst Giovanni Staunovo said.
    Platinum        shed 1.5% to $987.21, while silver       
dipped 1.7% to $25.09.

 (Reporting by Brijesh Patel and Seher Dareen in Bengaluru;
Editing by Amy Caren Daniel, Louise Heavens and Paul Simao)
  
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