(Bloomberg) -- Gold is headed for its biggest weekly loss in six months as Russia and Ukraine began their first direct talks in more than three years.
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Bullion is down 4% this week to trade near $3,190 an ounce. The first direct talks between Russia and Ukraine in more than three years ended in Turkey with an agreement on an exchange of prisoners and discussions on a potential ceasefire, though no truce was announced.
Progress on trade negotiations between the US and China also sapped demand, adding to bearish headwinds for gold as a detente between the world’s two largest economies led to a sharp rebound in risk assets.
Gold is seeing some “fatigue, as tariff de-escalation takes away some uncertainty, at least for now,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp.
The precious metal has dropped more than $300 from its all-time peak set last month. Despite that, bullion is still up by more than a fifth this year, fueled by a rebound in demand for bullion-backed exchange-traded fund products, strong central bank buying and speculative Chinese demand.
Ongoing volatility in US risk assets and the dollar “will lead more international investors to consider hedging more of their dollar exposure and globally diversifying their asset allocations,” Mark Haefele, chief investment officer for UBS Group AG, said this week. “Gold remains an important diversifier.”
Spot gold was down 1.7% to $3,185.50 an ounce as of 2:40 p.m. in New York. The Bloomberg Dollar Spot Index edged higher. Silver, palladium and platinum all declined.
--With assistance from Yvonne Yue Li.
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