Gold prices fell on Monday as U.S. Treasury yields rose on rate hike expectations, with higher risk appetite on hopes of peace between Russia and Ukraine denting bullion's safe-haven appeal further.
"One key reason is surging treasury yields. Also market seems to be pricing in on the FOMC meeting on Wednesday at which the Fed may start to kick off the tightening cycle. So, this is a negative factor for gold," said Margaret Yang, a strategist at DailyFX.
"Given the fact that both sides are willing to talk, I think the worst of the Ukraine crisis is probably behind us. It's unlikely that gold price will surge beyond the previous high from last week or reach a record high anytime soon."
Benchmark U.S. 10-year Treasury yields hit 2.09% on Monday morning, its highest point since July 2019, as the U.S. Federal Reserve is widely expected to raise interest rates by a quarter of a percentage point at a two-day event later this week.
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.
Pressuring gold's safe-haven demand, global shares advanced on Monday on hopes of a respite in the Ukraine crisis even as fighting raged on.
Palladium, used by automakers in catalytic converters to curb emissions, tumbled 15% to $2,377.00 per ounce. The metal hit a record high of $3,440.76 last week, driven by fears of supply disruptions from top producer Russia.
Russian mining giant Nornickel is facing significant logistics issues but has managed to secure alternative routes for its palladium deliveries.