Gold rises on concern over Ukraine crisis, Chinese growth

By Frank Tang and Clara Denina

NEW YORK/LONDON (Reuters) - Gold rose on Tuesday as fears of a slowdown in Chinese economic activity and worries about an escalating crisis in Ukraine boosted demand for bullion.

Tensions over Ukraine continued to build and with diplomacy at a standstill, European Union governments said they were considering sanctions against Russia if it failed to respond positively to an initiative to calm the crisis.

The Ukraine crisis sapped appetite for risk and weighed on U.S. equities, which also boosted gold demand.

The precious metal also climbed after China's data showed exports unexpectedly tumbled in February, swinging the trade balance into deficit. The data underscored recent concerns about the world's second-largest economy.

However, analysts warned of possible gold losses if geopolitical tensions ease and U.S. economy recovers.

"If the Russian situation can be contained and U.S. data continues to hold in, gold will turn into an excellent short opportunity once again, with specs likely to flip back from long to short quite quickly," said Bart Melek, head of commodity strategy at TD Securities.

Spot gold was up 0.7 percent at $1,346.70 an ounce by 2:35 p.m. EDT (1835 GMT), having earlier reached $1,352.50, near a four-month high.

U.S. COMEX gold futures for April delivery settled up $5.20 at $1,346.70 an ounce, with volume about 10 percent above its 30-day average, preliminary Reuters data showed.

The confrontation around the Black Sea peninsula showed no sign of easing on Tuesday, a day after pro-Russian forces opened fire in seizing a Ukrainian military base in Crimea and NATO announced reconnaissance flights along its eastern frontiers.

"There is still a good deal of safe-haven bidding in the market on Ukraine and any possible Russian response, and that's helping get beyond that crucial $1,350 technical and psychological level," Mitsubishi analyst Jonathan Butler said.

ETF INFLOWS

In a sign confidence in the precious metal may be returning amid global uncertainties, the world's biggest bullion-backed exchange-traded fund saw its largest inflow in a month. SPDR Gold Trust said holdings rose 7.50 tonnes to 812.70 tonnes on Monday, the biggest inflow since February 13.

Among other precious metals, platinum was down 1.1 percent at $1,457.80 an ounce, while palladium fell 0.9 percent to $765.90 an ounce. Silver gained 0.1 percent to $20.82 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Keiron Henderson, Jason Neely, David Evans and Nick Zieminski)