Gold up 1 percent at nearly four-month high on fears over Ukraine

By Frank Tang and Clara Denina

NEW YORK/LONDON (Reuters) - Gold rose 1 percent on Monday, reaching its highest level in nearly four months, as investors grew more anxious about economic and political uncertainty over Ukraine.

Some investors sought bullion as a safe haven after Ukraine appealed for urgent international aid after the fall of Russian-backed president Viktor Yanukovich cast doubt on a bailout deal with Moscow, saying it needed $35 billion over the next two years.

Acting President Oleksander Turchinov warned that Ukraine was close to default and "heading into the abyss."

The precious metal is often seen as a safe haven in times of political and economic turmoil.

Traders said that crude oil's advance and disappointing Chinese economic data also lifted gold, but the metal appears vulnerable without the help of strong physical demand.

"The situation in Ukraine and crude oil's gains are helping gold's rally," said Frank McGhee, head precious metals dealer at Chicago commodities brokerage Alliance Financial LLC.

"But I don't see massive amounts of buying other than some Asian demand last week," McGhee said. "I think the market is going to correct sooner or later."

Spot gold rose 1 percent to $1,336.56 an ounce by 4:49 p.m. EST (2149 GMT), having earlier hit $1,338.60, its highest since October 31.

U.S. gold futures for April delivery settled up $14.40 an ounce at $1,338. Trading volume was about 20 percent below its 30-day average, preliminary Reuters data showed.

Also underpinning gold was data from China showing home prices there eased for the first time in 14 months in January, fueling fresh concerns over the health of the world's biggest economies following lackluster U.S. manufacturing and employment data.

Investment sentiment improved after holdings of the largest gold-backed exchange-traded-fund (ETF), SPDR Gold Trust increased 0.3 percent on Friday from Thursday.

Bullion reversed its recent strong inverse link with equities, which had been pressured by economic uncertainties. On Monday, U.S. equities measured by the Standard & Poor's 500 index rose 1 percent to an intraday record high.

Rising Brent crude oil prices on production outages in Libya and South Sudan also supported gold's inflation-hedge appeal, traders said.

Among other metals, silver also hit its highest since October 31 at $22.16 an ounce earlier. It was last up 0.8 percent at $21.99 an ounce. Platinum gained 0.8 percent to $1,431.40 an ounce, and palladium inched down 25 cents to $738 an ounce.

(Additional reporting by Lewa Pardomuan in Singapore; Editing by William Hardy, Lisa Von Ahn and Jonathan Oatis)