Gold holds above $1,300; focus on Fed policy meeting

Geopolitical tensions in the Middle East and Ukraine supported gold

Gold was little changed just above $1,300 an ounce on Tuesday, supported by geopolitical tensions in the Middle East and Ukraine, with investors also focusing on US jobs data and a Federal Reserve policy meeting this week.

The Fed kicks off its two-day meeting later on Tuesday, with markets watching for clues as to when the US central bank will begin increasing interest rates. The Fed will make a statement on Wednesday at the end of the meeting.

"Gold is going to be range-bound until the Fed meeting and economic data later this week," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

"Until then, we can see gold holding near $1,300 as that seems to be a strong support level due to the geopolitical tensions."

Spot gold was flat at $1,305 an ounce at 0250 GMT, after slipping 0.3% in the previous session. US gold was up almost $2 at $1,304.90.

Important economic data out this week includes US non-farm payrolls and US gross domestic product.

Indications of a strong economic recovery could prompt the Fed to raise rates sooner than expected. Higher rates would encourage investors to withdraw money from non-interest-bearing assets such as gold.

Bullion, seen as a safe-haven asset, has benefited from tensions between the West and Russia. US and European leaders agreed on Monday to impose wider sanctions on Russia's financial, defence and energy sectors.

The new sanctions are aimed at increasing the pressure on Russian President Vladimir Putin after a Malaysian airliner was shot down over territory held by pro-Moscow rebels in eastern Ukraine.

Israeli Prime Minister Benjamin Netanyahu warned on Monday of a protracted war in Gaza, dashing any hopes of a swift end to the three-week conflict.

In the physical markets, demand was subdued as buyers were waiting on the sidelines for a possible drop in prices.

Premiums in top buyer China were steady at about $2-$3 an ounce.