NEW YORK: Gold retreated on Monday on pressure from higher US Treasury yields and a firmer dollar, while easing supply concerns ahead of Russia-Ukraine peace talks sent autocatalyst palladium tumbling nearly 8%.

Spot gold fell 1.07% to $1,936.36 per ounce by 12:01 p.m. ET(1601 GMT), while US gold futures declined 0.9% to $1,936.40.

Benchmark 10-year bond yields hit their highest since April 2019 on the day, buoyed by bets of aggressive interest rate hikes by the Federal Reserve to fight soaring inflation.

Although gold is considered an inflation hedge, rising US interest rates increase the opportunity cost of holding non-yielding bullion.

The weakness in gold should, however, be limited because of inflation worries, said Jim Wycoff, senior analyst at Kitco Metals.

“Anytime we have inflationary pressures like we’re seeing now, history shows that the metals markets have been sought after and I suspect that’s going to continue to be the case.” Making bullion more expensive for holders of other currencies, the dollar rose 0.5%.

Gold’s safe-haven appeal was also pressured by hopes of progress in the first face-to-face peace talks between Ukraine and Russia in more than two weeks.

“We’ve seen a large part of the war premium in gold already taken out, but maybe there’s a little further to go. So, gold is currently facing significant headwinds,” independent analyst Ross Norman said.

Palladium was down 5.7% at $2,204.61 per ounce after earlier falling to its lowest level since Jan. 25. The metal has lost nearly 34% since scaling a record high on March 7.

“On palladium, despite the airspace closure between Russia and the US and Europe, alternate routes allow Russia still to export palladium. So I guess some supply disruption concerns are vanishing,” UBS analyst Giovanni Staunovo said.

Platinum fell 1.6% to $986.36, while silver fell 1.9% to $25.03.