By Clara Denina
LONDON (Reuters) - Gold fell on Monday as European and U.S. shares rebounded on an easing of tensions in Ukraine, while a steadier dollar and U.S. Treasury yields pushed prices below $1,300 an ounce.
Russia's foreign ministry said "certain progress" had been achieved during talks between Russia, Germany, France and Ukraine in Berlin on Sunday about ways to end the military conflict in eastern Ukraine.
"There is not really any proper pricing in of a risk premium ... because the ultimate safe haven will turn out to be the dollar if things do escalate further in Ukraine, Iraq or Israel ... and not necessarily gold," Mitsubishi analyst Jonathan Butler said.
Spot gold fell 0.6 percent to $1,296.65 by 1401 GMT, while U.S. gold futures for December delivery were down $8.20 an ounce at $1,298.10.
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The dollar gained 0.2 percent against a basket of currencies after a sixth straight weekly loss. The yield on the benchmark 10-year U.S. Treasury note rose above 2.3 percent but remained close to a 14-month low hit in the prior week.
Returns from U.S. bonds are closely watched by the gold market, given that the metal pays no interest.
The market was awaiting the annual meeting of central bankers in Jackson Hole, Wyoming, on Thursday, including Federal Reserve chief Janet Yellen's speech on Friday, which could give clues about the timing of any interest rate increases.
The U.S. central bank is expected to raise rates in the middle of next year, depending on the strength of the economy. Higher interest rates would encourage investors to withdraw money from non-interest-bearing assets such as gold.
Standard Bank analyst Walter de Wet said the market was not expecting any shift in the Fed's strategy this week.
European and U.S. shares rallied as the threat of wider conflict in Ukraine seemed to diminish, although the situation remained delicate.
Tensions in Ukraine and the Middle East have largely contributed to gold's near 8 percent gain this year, igniting bouts of demand when investors turned to assets perceived as an insurance against risk. However, any impetus these events provided has not lasted long, analysts said.
Hedge funds and money managers boosted their bullish bets on gold futures and options for the first time in three weeks, data from the Commodity Futures Trading Commission showed on Friday.
"Gross short positions are at their lowest since December 2012. This underscores the fragility of prices ... given the absence of a sustained significant move higher amid rising geopolitical tensions and a lack of bearish interest in gold," Barclays said in a note.
Gold also continued to miss support from physical demand in major buyers China and India, which has been weak as many consumers expected prices to fall further.
Persistently soft buying from Asia has stoked worries that purchases will fail to pick up in the second half of the year, when they are normally stronger, bullion traders and dealers said.
Silver was down 0.2 percent at $19.57 an ounce and platinum fell 0.5 percent to $1,445.00 an ounce.
Palladium hit a 13-year high of $900.00 an ounce on fears over supply from top producer Russia and strong demand prospects, but later fell back to $894.50.
"It's the general strong fundamentals, with the supply side still experiencing disruptions and the industrial and investment side being extremely strong ... that could see prices revisit $900 in the near term," Butler said of palladium.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Clarke and Dale Hudson)
