(Bloomberg) Gold continues to suffer losses after seeing the largest drop in 14 months. Risk sentiment has improved since indications emerged that Ukraine is open for negotiations with Russia.

Bullion will be reducing some of its gains in this year due to lower demand for haven resources. The official said Ukraine is open to discussing Russia’s demand of neutrality as long as it’s given security guarantees — though it won’t surrender a “single inch” of territory. Asian shares joined the global rebound in equities on Thursday.

While precious metals like wheat and oil are rebounding from recent highs there is still concern about an inflationary shock that could impact the world economy as the Federal Reserve increases interest rates. According to Bloomberg’s initial data, investors continue to look to gold for a storage of value. Their holdings in bullion-backed, exchange-traded funds are at their highest level in one year. 

“Gold’s correction could also be due to profit-taking ahead of the Fed’s monetary policy meeting next week,” said Madhavi Mehta, a senior analyst at Kotak Securities Ltd. “However, nothing has changed on the geopolitical front, while inflation concerns also remain high, so we may not see a sustained decline. Gold may correct sharply only once there are concrete efforts to resolve the Russia-Ukraine standoff.”

Following a drop of 2.9% on Wednesday, Singapore’s ounces fell 0.8%, to $1,976.09 at 12:20 in Singapore. This was their lowest point since January 2021. On Tuesday prices hovered at $2,070.44, just $5 below the august 2020 record. Following a 0.9% drop in the previous session, Bloomberg Dollar Spot Index climbed 0.1%.

Palladium declined 1% and silver, as well as platinum, both fell by 1%.

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