Gold settles around $1,300 as US data lifts dollar

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Gold settled about 1 percent lower at five-week low on Wednesday as the dollar firmed, equity markets strengthened and the U.S. economy showed signs of recovery, while support from physical buying also was lacking.

Prices touched a six-month high of $1,391.76 early last week as mounting political tensions and fears over slowing economic growth spurred demand for the metal as an insurance against risk.

ended the trading session at $1,303.40 an ounce, down 0.6 percent on the day. Spot gold was down 0.6 percent at $1,302 an ounce lowest since mid-February.

(Read more: China's plan for global yuan hits speed bumps)

Chart: Precious Metals

Bullion has fallen from a six-month high of $1,391.76 hit early last week after U.S. Federal Reserve Chief Janet Yellen suggested interest rates could rise sooner than many had expected, denting bullion's appeal as a hedge against inflation.

(Read more: Fed's Plosser: Market reaction to the Fed statement was surprising)

European shares rose to two-week highs on Wednesday, with sentiment buoyed by stronger U.S. data as well as optimism over possible stimulus measures in the euro zone and China.

The dollar index, which measures the unit against six major currencies, also rose after data showed that orders for long-lasting U.S. manufactured goods rebounded in February and shipments snapped two straight months of declines.

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