Gold slips from $1,900 as potential Russia-US talks dull appeal

Gold prices retreated on Friday, after breaking above the key $1,900 level for a second consecutive session, as a Russia-U.S. meeting next week slowed investors' dash to the safety of bullion.

Spot gold fell 0.3% to $1,890.77 per ounce, as of 0308 GMT, after touching its highest in eight months at $1,902.22 earlier in the session.

U.S. gold futures dropped 0.5% to $1,892.70.

U.S. stock futures bounced on Friday and selling pressure eased in Asian share markets after the U.S. Secretary of State agreed to a meeting with Russia's foreign minister, raising hopes for a diplomatic solution to the East-West standoff over Ukraine. [MKTS/GLOB]

One of the deepest crises in post-Cold War relations is playing out in Europe as Russia wants security guarantees, including Kyiv never joining NATO, and the U.S. and allies offer arms control and confidence-building measures.

"We are seeing gold in extension of that invasion trade, said IG Markets analyst Kyle Rodda and "the next technical level to watch is around $1,920, so there's certainly technical basis to see gold prices rise."

On Thursday, gold rose as much as 1.8%, breaking past $1,900/oz for the first time since June 11, with analysts expecting a further rally if tensions continue to escalate, and vice-versa.

U.S. 10-year Treasury yields firmed, increasing the opportunity cost of holding non-interest-paying bullion. [US/]

Spot gold, however, is set for a third straight weekly gain, up about 1.7% so far.

"In the short term, bullion market inflows have clearly been buttressed by Russia/Ukraine geopolitics, higher equity market vols, and inflation hedge demand," analysts at Citi said in a note.

Spot silver was little changed at $23.80 per ounce and palladium dipped 0.7% to $2,349.52, with both set for small weekly gains.

Platinum gained 0.3% to $1,091.95, setting up its best weekly showing since June.

 

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Shailesh Kuber and Rashmi Aich)