By Brijesh Patel

(Reuters) – Gold fell by its largest weekly percentage point in almost four months Friday as fears of progress in the peace negotiations between Russia and Ukraine, as well as a rise in U.S. rates, fueled demand.

As of 10:30 AM, the price per ounce had fallen 0.6% to $1.931.90 ET (1430 GMT), and U.S. dropped 0.6% to $1.930.80, due to a weaker dollar.

Dollar rose 0.4% against other currencies, which made bullion less expensive for buyers from overseas. [USD/]

Capital.com’s chief market strategist David Jones said, “We have observed the invasion-driven momentum as well as speculative fury for gold” massively cooling off in the last ten day.”

This week’s drop in Bullion was 2.7%. The optimism surrounding the Peace Talks lifted sentiment on wider financial markets, reducing demand for safe-haven assets. [MKTS/GLOB]

“If there is a ceasefire or some sort of a deal, gold could drop fairly quickly,” said Edward Meir, analyst with ED&F Man Capital Markets.

Bullion is being put under increasing pressure by the Federal Reserve raising interest rates by quarter of an percent this week. The Federal Reserve also forecasts an aggressive plan for next year to restrict borrowing.

The opportunity cost to hold non-interest bearing gold at a higher rate of interest tends to increase.

Standard Chartered OTC analyst Suki Cooper stated that the Fed’s hawkish approach did not undermine the positive sentiment about gold. He also noted that recent geopolitical risks had raised inflation fears, which has rekindled longer-term investment in gold.

Spot palladium gained 0.1% to $2513.35/ounce. But, the weekly drop was more than 10% due to fears over Russia’s stock.

Silver declined 1.2% at $25.02 an troy ounce. Platinum rose 0.8% to $1.028.83