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Gold prices retreated from a multi-month peak on Tuesday while palladium slipped more than 5% as news about some Russian troops near Ukraine returning to their bases drove a rebound in riskier assets.

Spot gold was down 1.3% to $1,846.46 per ounce by 1318 GMT, after hitting its highest level since June 11 at $1,879.48.

U.S. gold futures fell nearly 1% to $1,851.00.

"What we saw late on Friday in the U.S. session and going into Monday was all driven by the fear of Russian invasion. So any sign that it's less likely, is weighing on gold pulling it back from those highs," said Craig Erlam, senior market analyst at OANDA.

Stocks and other risky assets made a modest recovery, halting a market selloff over several days, following signs of a de-escalation in geopolitical tensions. [MKTS/GLOB]

"Gold could move moderately lower after the geopolitical risk premium is removed, but still be underpinned because the inflationary pressures could see it at a $1,800 level," said Xiao Fu, head of commodities markets strategy at Bank of China International.

Bullion is considered a hedge against inflation and geopolitical risks, but interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

Caught in gold's slipstream, spot silver fell 2.7% to $23.18 per ounce, platinum was down 1.4% at $1,014.04, and palladium dipped 3.4% to $2,280.03.

Palladium has seen sharp rallies of late, having logged its best month in 14 years in January, with analysts flagging a possible disruption to supply from key producer Russia if the Ukraine conflict escalates.

Market participants also kept a tab on the U.S. Federal Reserve's rate hike plans, with officials continuing to spar over how aggressively to begin upcoming rate increases at their March meeting.

"The (FOMC minutes) will be gone over with a fine tooth comb to evaluate to what level there's a discord within the U.S. Federal Reserve on increasing rates," Ross Norman, an independent analyst said.