Gold managed to log a modest gain on Thursday after stronger-than-expected U.S. jobs and retail sales data lifted the dollar off early lows, but prices were underpinned by tensions surrounding Russia's standoff over Ukraine.
Concerns about Russia's standoff over Ukraine and a drop in the dollar to 2-1/2 year lows against the euro earlier fueled a rally in gold to $1,374.85 an ounce, its highest since Sept. 10.
A firmer tone to U.S. data is seen supporting expectations that the Federal Reserve will maintain tapering of its bullion-friendly monetary stimulus program. Speculation that the scheme was ending helped knock gold 28 percent lower last year.
"The tapering story hasn't gone away, it had just faded into the background," Jonathan Butler, an analyst at Mitsubishi, said. "It's looking like the Fed will continue its $10 billion a month rate (of tapering). I wouldn't be looking for an acceleration of that rate at this stage, but if we do see that, you would expect to see gold sustaining some collateral damage."
Russia announced on Thursday it had started military exercises near the border with Ukraine, in what is likely to be seen as a show of force in the standoff with Kiev and the West over Crimea.
Gold has been chiefly driven higher this week by fears that the tensions between Russia and the West over Ukraine could escalate, prompting buying of gold as an alternative to cyclical assets like stocks.