Gold held back losses after bond yields rose ahead of a key Federal Reserve meeting where policymakers will raise interest rates. Bullion has eased after rallying to within $5 from last week's record as Russia's invasion of Ukraine and accelerating inflation.

The war has led to continued inflows into gold-backed exchange-traded funds, pushing total holdings to their highest level in a year, according to preliminary data compiled by Bloomberg.

Months of speculation about a fresh wave of rate hikes are likely to peak on Wednesday when the US central bank is expected to begin tightening controls on decades of high inflation, exacerbated by soaring commodity prices.

Markets are now indicating they expect about a seven-quarter point Fed rate hike in 2022. The 10-year Treasury yield extended gains after climbing to the highest level since July 2019, reducing interest-free gold's appeal.

Price action will depend on Fed comments in the short term, but I wouldn't be surprised to see a gold rally on Fed hike days, if the comments aren't overly hawkish, said John Feeney.

Any change in the current situation in Ukraine will likely outweigh the focus on the Fed, and inflation is expected to remain high for some time which could sustain gold and silver prices.

Gold Price Changes Slightly After a Drop

Spot gold was little changed at $1,951.09 an ounce in Singapore, after dropping 1.9% on Monday. Prices touched $2,070.44 last week, close to an all-time high hit in August 2020.

The Bloomberg Dollar Spot Index is steady. Silver and platinum are both little changed. Palladium was up 0.2% after dropping 15% on Monday, the most since March 2020, as supply concerns eased.

Vladimir Potanin, the biggest shareholder in major producer MMC Norilsk Nickel PJSC, said the company was maintaining exports despite the suspended air links with Europe and the US by rerouting shipments.

Separately, the European Union will agree to ban sales of luxury goods to Russia above a certain value as well as purchases of many steel and iron products from the country as part of the fourth round of sanctions over the invasion of Ukraine.

Entering the trading week of the European session on Monday, spot gold prices began to continue their weakening session last weekend which was a further correction from the highest position since August 2020.

Thus, the price of Comex gold for futures contracts in April was corrected below the price range of US$1980. Gold prices have the potential to continue to slip down on plans for rate hikes

Oil Prices Await Hopes Russia-Ukraine Tensions

Prices for commodity gold have slipped further below $1,980 per troy ounce as all investors brace for a planned rate hike from the Fed or the Federal Reserve this week that also pushes the 10-year US Treasury yields through the range of 2%, the highest since last July 2019.

The US central bank is expected to raise its target fed funds rate by 25 basis points at the end of a two-day meeting on Wednesday, starting a cycle of tightening across its policies.

All investors are also trying to keep an eye on new forecasts for a hike in interest rates, inflation rates, and economic sector growth given the added uncertainty of the Russia-Ukraine war.

In addition, hopes for a diplomatic solution between Russia and Ukraine ahead of the resumption of peace talks today are limiting safe-haven demand.

Commodity Gold reached a record high early last week at $2,070 as all investors took action to protect all their assets against the uncertainty of geopolitical and economic conflicts.

It was observed that spot gold commodity prices fell by 8.81 points or 0.44% to a price range of US$1972.10 per troy ounce and prices for Comex gold for contracts in April 2022 later fell by 11.40 points or 0.57% to a price range of US$1973.60 per troy ounce.