Gold dropped from near a 13-month high as risk sentiment was buoyed by Russia saying it was ready to resume talks with Ukraine.

The metal fell more than $ 17 in one minute as trading volume on Comex futures spiked. Bullion then pared those losses but remained down on the day, with haven assets under pressure after the Kremlin signaled it was open to further talks with Ukraine.

In February, gold had its best monthly performance since May amid mounting concern that the raft of sanctions against Russia could dim the outlook for global growth and further stoke inflation. The metal has edged higher again so far in March.

Bullion-backed exchange-traded funds have continued to increase their holdings in recent weeks. They added almost 14 tons on Tuesday in the biggest daily inflow in more than a month, according to an initial tally by Bloomberg.

Threats to supplies of grain, energy and metals are adding to price pressures, with a Bloomberg index of commodities jumping the most since 2009 to record high. Traders are now dialing down rate-hike bets, including pricing out any risk of a half-point March liftoff by the US Federal Reserve. Chair Jerome Powell said the central bank expects to raise interest rates later this month, although the added invasion of Ukraine has added uncertainty to the outlook for the economy.

Spot gold fell 0.6% to $ 1 932.93 an ounce at 1:54 pm in London after rising 1.9% on Tuesday to the highest since January 2021. Silver declined, while platinum and palladium gained. The Bloomberg Dollar Spot Index rose 0.2%.

© 2022 Bloomberg

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