Gold climbs 1 percent; Ukraine tensions support

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold rose more than 1 percent on Tuesday boosted by technical buying after crossing the $1,300-an-ounce mark, while mounting geopolitical tensions in Ukraine burnished its safe-haven appeal.

The rise in bullion comes despite a sharp jump in Asian equities and subdued demand in top buyer China, where prices have been at a discount for more than a month.

Spot gold rose to a session high of $1,309.80 before falling back slightly to trade up 0.9 percent at $1,307.41 by 0659 GMT.

It fell below $1,300 in the previous session as a short-covering rally after U.S. jobs data fizzed out.

"Stops were triggered once prices crossed $1,300 as we were trying to breach that level since early Asian trading," said one Hong Kong-based trader.

"Ukraine tensions are supportive and there seems to be some buying from China which returned from a holiday but it is not a big jump in demand."

In Ukraine, pro-Moscow protesters seized arms in one city and declared a separatist republic in another, in moves Kiev described as part of a Russian-orchestrated plan to justify an invasion to dismember the country.

Ukraine has launched an "anti-terrorist" operation in the eastern city of Kharkiv and about 70 "separatists" have been arrested for seizing the regional administration building.

Gold, seen as an alternative investment, usually benefits from economic and geopolitical uncertainties.

"To the extent that investor pessimism overshadows the ongoing improvement in the U.S. economy and equity benchmarks struggle to make headway, gold should continue to benefit from investment demand," said analysts at ETF Securities, a provider of exchange-traded funds.

CHINESE DEMAND

Chinese markets reopened after the Tomb Sweeping holiday on Monday, providing some support to prices.

Traders said they noticed a small uptick in buying interest for gold, with Shanghai discounts to London prices narrowing from Friday's $2 an ounce to less than 50 cents on Tuesday.

Chinese gold prices have been at a discount to spot prices since early March, leading to lower imports.

Morgan Stanley on Monday lowered its gold price forecast for 2014 by 12 percent to $1,160, citing near-term headwinds relating to rising U.S. interest rates and mounting regulatory pressure on investment banks to scale bank commodity operations.

Silver, platinum and palladium were all up about 1 percent.

(Reporting by A. Ananthalakshmi; Editing by Edwina Gibbs and Anupama Dwivedi)