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Gold lower as stocks, dollar strengthen; holds near $1,300

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Gold settled lower around $1,300 an ounce on Monday as European and U.S. shares rebounded on an easing of tensions in Ukraine, while a steadier dollar and U.S. Treasury yields pushed prices below $1,300 an ounce.

Russia's foreign ministry said "certain progress" had been achieved during talks between Russia, Germany, France and Ukraine in Berlin on Sunday about ways to end the military conflict in eastern Ukraine.

"There is not really any proper pricing in of a risk premium ... because the ultimate safe haven will turn out to be the dollar if things do escalate further in Ukraine, Iraq or Israel ... and not necessarily gold," Mitsubishi analyst Jonathan Butler said.

U.S. gold futures for December delivery fell $6.90 on the day to close at $1,299.30 an ounce. Spot gold was last down 0.4 percent at $1,299 an ounce.

The dollar gained 0.2 percent against a basket of currencies after a sixth straight weekly loss, while the 10-year yield rose above 2.3 percent, but remained close to a 14-month low hit in the prior week.

Symbol
Name
Price
 
Change
%Change
Volume
GOLD
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GOLD/USD
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SILV/USD
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SILVER
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PALL/USD
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PLAT/USD
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Returns from U.S. bonds are closely watched by the gold market, given that the metal pays no interest.

The market was awaiting the annual meeting of central bankers in Jackson Hole, Wyoming, on Thursday, including Federal Reserve chief Janet Yellen's speech on Friday, which could give clues about the timing of any interest rate increases.

The U.S. central bank is expected to raise rates in the middle of next year, depending on the strength of the economy. Higher interest rates would encourage investors to withdraw money from non-interest-bearing assets such as gold.

European and U.S. shares rallied as the threat of wider conflict in Ukraine seemed to diminish, although the situation remained delicate.

Tensions in Ukraine and the Middle East have largely contributed to gold's near 8 percent gain this year, igniting bouts of demand when investors turned to assets perceived as an insurance against risk. However, any impetus these events provided has not lasted long, analysts said.

Hedge funds and money managers boosted their bullish bets on gold futures and options for the first time in three weeks, data from the Commodity Futures Trading Commission showed on Friday.

—By Reuters with CNBC