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Earlier, bullion fell as much as 0.6% after statements from Washington and the Elysee that both the US and Russia had agreed to the summit proposed by French President Emmanuel Macron.
Gold then pared those losses after a Kremlin spokesperson said that while a meeting between Biden and Putin remained possible, no plans were in place.
European financial markets tumbled at signs of increased confrontation, after having briefly edged higher on a glimmer of hope that a summit might offer a path out of Europe’s biggest military crisis in decades.
Gold eyeing $1,900
Recent headlines relating to Ukraine have strongly contributed to gold paring its earlier losses as risk appetite has slipped once more, Craig Erlam, senior market analyst at OANDA, told Reuters.
“We are seeing some resistance around $1,900, but the way the situation is evolving, that may struggle to hold as the day progresses,” he added.
Gold has rallied this month as simmering geopolitical tensions between Ukraine and Russia drive haven demand.
Concerns about Moscow’s troop build-up near the borders of its smaller neighbor have sparked renewed inflows into gold backed exchange-traded funds, while money managers trading the Comex have also boosted their net long bets to a three-month high.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.5% on Friday.
“Further gold strength cannot be ruled out for now — a move beyond $1,900 is likely to be amplified in the short term by momentum buying” and fearing-of-missing-out trades, UBS Group AG analyst Joni Teves wrote in a Bloomberg note.
“Such a move is likely to put the focus next on the $1,920 and $1,950 areas,” Teves added.
The recent geopolitical tensions have outweighed gold’s bearish sentiment from the prospect of the US Federal Reserve’s first rate rise in March, which could damp demand for the non-interest-bearing asset by pushing up Treasury yields.
(With files from Bloomberg and Reuters)
