Bengaluru: Gold lost its lustre on Friday, with prices set for their worst week since November as the dollar strengthened, even as the Russia-Ukraine war raged on. However, the theme of increased volatility persisted throughout the week, even as a surge in flight-to-safety wagers aided the dollar, harming bullion demand globally.

Spot gold declined 0.5 per cent to at $1,9300 per ounce, while US gold futures fell 0.5 per cent to around $1,930.

Craig Erlam, senior market analyst at OANDA told that "These - gold and the dollar - are highly turbulent, headline-driven markets, so we might see plenty more movement throughout the day in both directions," added that apparent progress in Russia-Ukraine talks was largely responsible for gold's weekly drop.

Gold has dropped more than 2.5 per cent this week, with markets scrambling to re-price the US Federal Reserve's rate hike trajectory after the central bank's estimates based on dot plots revealed policymakers had pencilled in six rate hikes this year.

Gold is typically employed as a hedge during economic downturns and periods of excessive inflation. Nonetheless, increasing interest rates and the predicted interest rate differential between the US and its counterparts are expected to keep the dollar well bid.

Gold bounced marginally after the Fed said that it hiked borrowing costs in line with expectations, the central bank acknowledged the potential of surging inflation as the developing Russia-Ukraine conflict raised concerns about oil supply.

"Gold will continue to be warmly supported. As long as there is a high demand for safe havens and inflation hedges, "According to Mr. Erlam, declines are increasingly being bought into.

Spot palladium increased more than 2 per cent to at $2,570 per ounce but was set for a weekly drop of nearly 9 per cent as concerns about supply from major supplier Russia eased.

Meanwhile, according to Matt Simpson, senior market analyst at City Index, China's intention to combat COVID-19 with minimal impact on the economy and people's lives, as well as the promise of additional stimulus, has brought palladium bulls back to the table.

This comes after many sessions of wild market action in which platinum, palladium, and other important metals dropped to technical support levels after significant increases.