Gold ends nearly 1% lower as Ukraine tensions cool

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Gold settled about 1 percent lower on Tuesday as investors took profits from the previous session's rally to near four-month highs after President Vladimir Putin said Russia would only use military force in Ukraine as a last resort.

Bullion's drop came as U.S. equities measured by the S&P 500 index surged more than 1 percent to a record high after Putin ordered troops involved in a military exercise near the Ukrainian border back to their bases as he sought to ease tensions.

Prices of safe-haven U.S. Treasury debt also fell following Monday's gain after escalating military tension between Russia and the West over Ukraine hammered Russian financial markets.

for April delivery settled 0.9 percent lower at $1,337.90 an ounce, its worst daily loss since late January.

Spot gold was last down 1 percent at $1,337 an ounce.

Lingering economic uncertainty related to worries over Ukraine, however, should underpin gold prices, analysts said.

"We are seeing some profit-taking," said Eugen Weinberg, head of commodities research at Commerzbank.

(Read more: Latest Ukraine news and market reaction)

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"Because the conflict looks like it could well last some time, gold should be well able to defend its current price level, and even gain further ground again in the short term," he said.

The yellow metal rallied nearly 2 percent on Monday as investors, alarmed by East-West tensions, piled into bullion and government debt. Crude oil futures climbed while stock markets plunged.

Those moves went into reverse on Tuesday, with U.S. stock markets recovered lost ground and crude oil tumbled about 2 percent.

—By Reuters

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