Gold price edged up on Thursday but held near a more than two-month low with a rally in equities dimming its appeal as an alternative investment, while demand from jewellers was also muted as they waited for prices to drop further.
Investors are now waiting for the release of U.S. jobless claims and durable goods orders data for clues on the health of the world's largest economy ahead of next week's meeting of the Federal Reserve Open Market Committee on interest rates.
Gold rose $3.66 to $1,286.95 an ounce by 0351 GMT on short covering. It hit a low of $1,277.10 on Tuesday, its weakest since Feb. 11 due to outflows from physical gold funds.
"There are conflicting signals on the chart and I think traders are waiting for a breakout. On the spot gold chart, I am looking at support and resistance at $1,280 and $1,288.50," said Joyce Liu, investment analyst at Phillip Futures.
"A sudden escalation of tension in Ukraine is probably going to provide support. Especially at this point, when traders are looking for a sign which will tilt the scale towards either bullish or bearish side."
Russian Foreign Minister Sergei Lavrov accused the United States of being behind the political upheaval in Ukraine and said Moscow would respond if its interests came under attack.
However, it is the U.S. economic health that will continue to be the main driver of gold prices in the near term, while a lack of physical buying was likely to trim gains, dealers said.
U.S. gold was at $1,287.20 an ounce, up $2.60.
Investment demand remains weak with the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, seeing sharp outflows in recent days.
Last week, the fund's outflows totalled 9.3 tonnes, erasing all the gains made in the year.
"It seems that $1,300 is not easy to break through for the time being. There's not much buying from China. People are just waiting for the price to fall," a physical dealer in Hong Kong said. "Premiums for gold are mostly unchanged at $1, although there are also people who offer it at 80 cents premiums, depending on the brand."
In other markets, shares in tech heavyweights Apple and Facebook held hefty after-hours gains on Thursday as their results handily outpaced Wall Street expectations, though Asian markets managed only a mumbled cheer on the news.