Gold rose on Monday as heightened tensions in Ukraine spurred some safe-haven buying, but a lack of strong physical demand could weigh on prices, analysts said.
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Bullion briefly rose above $1,300 an ounce after pro-Moscow rebel leaders in eastern Ukraine called for their region to become part of Russia after declaring victory in a weekend referendum on self-rule, a move that could drag the country into war.
However, gold's failure to hold above key support of $1,300 an ounce and gains in U.S. equities, with the S&P 500 index moving within 1 percent of its record high, cut the metal's gains.
"The floor looks to be softening for gold, with physical demand not making up for soft investor demand," said Christopher Louney, precious metals analyst at Barclays Capital. "We still think that gold will move lower."
Spot gold was up 0.6 percent at $1,295.95 an ounce by 3:50 p.m. EDT (1950 GMT), having earlier hit a high of $1,303.80.
U.S. COMEX gold futures for June delivery settled up $8.20 an ounce at $1,295.80, with volume about 10 percent above its 30-day average, preliminary Reuters data showed.
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Silver outperformed gold, rising 2.1 percent to $19.50 an ounce.
GOLD BUYING SUBDUED
Subdued buying in the physical markets hurt sentiment towards gold.
In top buyer China, local premiums over the global benchmark rose slightly, but they are still much lower than the over-$20 premiums seen earlier in the year.
China's weakening demand for physical metals was reflected by a 44 percent year-over-year fall in the demand of gold bars in the first quarter, according to data by the China Gold Association.
Spot platinum climbed 0.8 percent to $1,432.75 an ounce and spot palladium was up 0.9 percent at $805 an ounce.
Lingering supply worries underpinned platinum prices after one South African miner was killed on Monday and three others died over the weekend in violence at strike-hit platinum mines, police said, threatening Lonmin hopes to end the dispute this week.
The pay dispute in the world's top platinum producing country has cut 40 percent of global production and halted operations at Lonmin's mines and processing plants.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy, Peter Galloway and Marguerita Choy)