Gold settled modestly higher on Wednesday as Wall Street stocks rose and as strong U.S. industrial production data fed investor caution about bullion a day after prices fell nearly 2 percent.
Gold traded near its key 200-day moving average support near $1,300 an ounce after a U.S. government report showed industrial production rose faster than expected in March.
Still, other U.S. data showed that the housing market still dragging the U.S. economy. Groundbreaking for new homes increased in March, but remained well below the post-recession peak hit in November.
Any safe-haven bid for gold was muted by the absence of new violence reported between Ukraine government forces and pro-Russian separatists in Eastern Ukraine, traders said.
for June delivery settled $3.20 higher at $1,303.50 an ounce.
Spot gold was last down 0.1 percent at $1,301 an ounce, following Tuesday's 1.8 percent drop on technical selling after prices fell below the 200-day moving average.
Analysts said bullish U.S. economic data has prompted speculators to sharply trim bearish bets, but gold remains vulnerable should investors close out more long positions.
"There is room for specs to cut back further, and with increasingly limited liquidity ahead of the holidays, it wouldn't take as much to get prices moving south," said UBS precious metals strategist Edel Tully.
After reaching a peak of $1,330 an ounce on Monday, gold was hit by a wave of selling as worries over economic growth and demand from top consumer China pushed it through a series of key chart levels.
U.S. equities rose for a third straight session after China reported economic growth a touch above forecasts, a relief for stock market investors fearful of a much weaker outcome.
On the investment side, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.60 tons to 806.82 tons on Tuesday, in the second straight day of inflows after three weeks of outflows.
The U.S. gold market will be shut on Friday for the Good Friday holiday.
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