(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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