Gold settled modestly lower on Tuesday, erasing earlier gains, as investors digested news U.S. retail sales braked sharply in April but that did little to change views the economy was poised for faster growth this quarter.
Gains in the dollar held the metal in check, with a report that the German central bank would back monetary easing measures driving the U.S. unit higher against the euro.
The single currency hit a one-month low versus the dollar.
for June delivery ended $1 lower at $1,294.80 an ounce. Spot gold, meanwhile, was down 0.2 percent at $1,293 an ounce.
"What's pointing to lower prices are the stronger equity markets, the firmer dollar," Commerzbank analyst Daniel Briesemann said. "(But) it looks as though the gold price has found some support around these levels."
"It seems to be a level at which buyers are stepping in, seeing the price as a buying opportunity."
The stand-off between pro-Russian separatists and government forces in Ukraine has supported gold over the past month, preventing a break lower.
German Foreign Minister Frank-Walter Steinmeier said in Ukraine on Tuesday he hoped 'round table' talks this week would help disarm the separatists and improve the atmosphere for elections due later this month.
Pro-Moscow rebel leaders in eastern Ukraine called on Monday for their region to become part of Russia, the day after staging a referendum on self-rule, although Moscow stopped short of endorsing their bid for annexation.
The metal is still up 7 percent this year due mainly to a strong first quarter, with prices little changed from the beginning of April. It has been caught in a range between $1,285 and $1,315 an ounce since the middle of last month.
"(A break out of that range) would only be caused by an escalation between the West and Russia that would send stock markets down and investors out of risky assets and into safe havens, (such as) government bonds and gold," Peter Fertig, a consultant at Quantitative Commodity Research, said.
Investor wariness was already showing, with SPDR Gold Trust , the world's top gold-backed exchange-traded fund, recording an outflow of 2.39 tons to 780.46 tons on Monday, the first outflow since May 2.
Physical demand across top consumer Asia has at the same time been weak due to volatile prices.
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