LONDON: Gold was supported above $1,300 an ounce on Wednesday, as investors remained cautious after downbeat data from China and as the crisis in Ukraine threatened a fragile economic recovery in Europe, but a firmer dollar and equities weighed.
Spot gold was up 0.1 percent at $1,309.60 an ounce by 0947 GMT, but still well below a three-week high of $1,322.60 hit on Friday.
U.S. gold futures for December delivery were unchanged at $1,310.70.
"It seems that the $1,308-9 level has become a bit of a magnet to the market as it is not any clearer what the focus should be at the moment," Saxo Bank senior manager Ole Hansen said.
"The geopolitical tensions do have their moments of impact but they just don't last too long ...the euro is in dire straits from an inflation point of view, Germany is slowing, Italy is in recession and that could be where we are getting the inspiration today."
The dollar was up 0.1 percent against a basket of currencies, gaining most support from a lower euro. European shares ticked higher on brighter corporate results, withdrawing some support from assets perceived as safer such as gold.
Bullion investors will continue to monitor U.S. data releases, as the strength of the world's largest economy dictates the pace at which the Federal Reserve tightens monetary policy. The next focus is a U.S. retail sales report later in the day.
The impact of stronger shares and a firmer dollar was however offset by investor cautiousness after weak loans data in China. Added to that, a survey on Tuesday showed German analyst and investor morale plunged in August to its lowest level in more than 1-1/2 years as the crisis in Ukraine took its toll.
Tensions in the Middle East also boosted gold's appeal as an alternative investment.
Gold is often seen as an insurance against financial and political risk.
A lack of robust physical demand could make it hard to sustain rallies and may also mean there is little support if prices drop.
"What is worrying is that physical demand has been very slow this year. We might see some slight pick-up in demand towards the end of the year," said Dick Poon, general manager of refiner and dealer Heraeus Metals in Hong Kong.
Silver was up 0.7 percent at $19.94 an ounce. Platinum rose 0.3 percent to $1,468.70 an ounce, while palladium gained 0.5 percent to $876.95 an ounce.
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