Gold firm above $1,300 on West Asia violence, fund inflows

Spot gold was little changed at $1,304 an ounce by 0013 GMT

Gold was holding its ground above $1,300 an ounce on Thursday as violence deepened in the West Asia over the Gaza strip and as holdings in the top bullion-backed fund rose on safe-haven bids.

Fundamentals

* Spot gold was little changed at $1,304.01 an ounce by 0013 GMT, after dipping 0.2% in the previous session. US gold was also flat at $1,304.80.

* Gaza fighting raged on Wednesday, displacing thousands more Palestinians in the battered territory as US Secretary of State John Kerry said efforts to secure a truce between Israel and Hamas had made some progress.

* American aviation authorities extended a ban on US flights to Tel Aviv for a second day, spooked by rocket salvoes out of the Gaza Strip, with many other global airlines also avoiding the Jewish state.

* Meanwhile, tensions remained high between Russia and the West over Ukraine. Kiev said two of its fighter jets were shot down over the rebel-held territory in eastern Ukraine on Wednesday, and the missiles that brought them down might have been fired from Russia.

* Fierce fighting raged near the pro-Russian rebels' two main centres in Donetsk and nearby Luhansk, where they have been pushed back in recent days by Ukrainian government forces, who have regained control of villages and suburbs around the cities.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.6 tonnes to 805.44 tonnes on Wednesday - a second straight day of increase.

* Gold is seen as an alternative investment to riskier assets such as equities during times of uncertainties.

Market news

* Global equity markets edged higher on Wednesday as a backdrop of solid corporate earnings buoyed risk appetite, but worries over the West Asia and Ukraine kept demand strong for safe-haven assets such as bonds.