Gold steadied on Tuesday, clawing back early losses, as a rally in European stocks lost steam and U.S. stocks opened flat, as economic data painted a mixed picture of the economy.
Gains in the dollar held the metal in check, with a report that the German central bank would back monetary easing measures driving the U.S. unit higher against the euro. The single currency hit a one-month low versus the dollar.
Spot gold was flat at $1,295.20 an ounce at 1342 GMT, having earlier slipped as low as $1,288.64, while U.S. gold futures for June delivery were down 30 cents an ounce at $1,295.50.
"What's pointing to lower prices are the stronger equity markets, the firmer dollar," Commerzbank analyst Daniel Briesemann said. "(But) it looks as though the gold price has found some support around these levels."
"It seems to be a level at which buyers are stepping in, seeing the price as a buying opportunity."
The stand-off between pro-Russian separatists and government forces in Ukraine has supported gold over the past month, preventing a break lower.
German Foreign Minister Frank-Walter Steinmeier said in Ukraine on Tuesday he hoped 'round table' talks this week would help disarm the separatists and improve the atmosphere for elections due later this month.
Pro-Moscow rebel leaders in eastern Ukraine called on Monday for their region to become part of Russia, the day after staging a referendum on self-rule, although Moscow stopped short of endorsing their bid for annexation.
The metal is still up 7 percent this year due mainly to a strong first quarter, with prices little changed from the beginning of April. It has been caught in a range between $1,285 and $1,315 an ounce since the middle of last month.
"(A break out of that range) would only be caused by an escalation between the West and Russia that would send stock markets down and investors out of risky assets and into safe havens, (such as) government bonds and gold," Peter Fertig, a consultant at Quantitative Commodity Research, said.
UNDERLYING GOLD DEMAND SOFT
Investor wariness was already showing, with SPDR Gold Trust , the world's top gold-backed exchange-traded fund, recording an outflow of 2.39 tonnes to 780.46 tonnes on Monday, the first outflow since May 2.
Physical demand across top consumer Asia has at the same time been weak due to volatile prices.
"A few bids emerged in the lead-up to the Chinese open, taking us to the daily high, but that quickly reversed when the demand never eventuated on the Shanghai Gold Exchange," MKS said in a note early on Tuesday.
Silver was flat at $19.50 an ounce, while spot platinum was up 1.3 percent at $1,450 an ounce and spot palladium was up 1.1 percent at $812 an ounce.
Platinum stretched its premium over gold to its highest since mid January at $154 an ounce as a strike among South African platinum miners ground on toward the four-month mark.
South African police deployed additional officers to the platinum belt on Tuesday to protect striking miners expected to start returning to work this week, a police spokesman said, as companies pushed ahead with plans to resume production.
It is unclear how many workers will be coming back, but the three platinum firms affected by the action - Impala Platinum , Anglo American Platinum and Lonmin - say a majority of the 70,000 strikers whom they have contacted directly want to end the strike, the longest in South African mining history.