Gold ended the trading session with a modest gain on Wednesday after weak U.S. data cast doubts over the pace of the economic recovery, but gains were kept in check by easing demand for safe assets as Washington and Moscow set up talks to reduce tensions over Ukraine.
The Institute for Supply Management said the U.S. services sector index fell to 51.6 last month, the worst read for the index since February 2010 as bad weather affected business activity. Separately, U.S. private employers added 139,000 jobs in February, below economists' expectations for a gain of 160,000 jobs.
A U.S. nonfarm payrolls report on Friday should give investors a further opportunity to gauge the strength of the economic recovery and its potential implications for the Federal Reserve's plan to unwind its stimulus program.
"The situation in Ukraine has generated some demand for the metal as a diversification tool at the start of the week, but that support seems to be vanishing now,'' Bernard Sin, MKS SA vice president, said.
"And you also have weak physical demand, while the U.S. figures continue to paint a disappointing picture for the U.S. economy ...traders will look at more figures for direction.''
U.S. gold futures for April delivery settled $2.40 higher at $1,340.30 an ounce.
Spot gold was up 0.3 percent at $1,338 an ounce, after dropping 1.2 percent on Tuesday. It hit its highest since Oct. 30 at $1,354.80 on Monday after news of escalating tensions in Ukraine hurt stock markets.
European stocks were mixed, while U.S. equities opened little changed, and the dollar fell 0.1 percent against a basket of currencies.
Bullion has climbed 11 percent this year, following last year's 28 percent drop, as a spate of soft economic data from the United States and China has drawn investors back to the metal.
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