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Gold steady, but Ukraine election win could push it lower

Gold held below $1,300 an ounce on Monday after ending flat for two straight weeks, but a Ukraine presidential election win by a pro-West candidate could bring stability to the country and undermine the precious metal's safe haven status.

Exit polls in Ukraine gave pro-West billionaire Petro Poroshenko, a confectionery magnate with long experience in government and diplomatic ties to both Russia and the West, more than 55 percent of the vote.

Gold
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"The election in Ukraine could be the beginning of something that helps solve or at least minimises the risk but it is still early days ...if anything it may start reducing some of the risk premium in the gold market," Saxo Bank head of strategy Ole Hansen said.

Gold is usually seen as an insurance against risk in times of economic uncertainty or global political troubles.

Read More'Chocolate King' hopes for sweet end to Ukraine crisis

Trading was subdued on Monday as U.S. and UK financial markets are closed for holidays.

Spot gold was unchanged at $1,292.66 an ounce by 1059 GMT. The metal has closed between $1,291 and $1,296 in the last seven sessions.

In wider markets, the dollar was down 0.1 percent against a basket of currencies, while European shares rose after initial European election results showed the pro-European centre-left and centre-right parties will keep control of around 70 percent of the 751-seat EU legislature.

Comments by European Central Bank President Mario Draghi that the ECB is watching exchange rate and credit dynamics carefully and stands ready to act should it see signs of a negative price spiral.

Setting out policy options for different scenarios, Draghi said that should exchange rate or market developments result in an unwarranted tightening of monetary and financial conditions "this would require adjustment of our conventional instruments".

Read MoreECB prepared to act on inflation risks: Draghi

Such instruments include interest rate cuts.

Negative interest rates in the euro zone would pressure the euro against the dollar. A stronger dollar would make gold more expensive for foreign investors.

The gold market will also be focused on an ECB meeting next week when the bank is expected to take steps to ease monetary policy further and boost growth.

"We are just sitting here in the lower end of the range today and it's difficult to see where the driver should come from," Hansen said. "The focus is going to be on next week when we heard the ECB meeting."

Recent outflows from gold funds have indicated that investor sentiment remains fragile.

Hedge funds and money managers cut their bullish bets in gold futures and options and switched to a net short position in silver in the week to May 20, according to data from the Commodity Futures Trading Commission on Friday.

Read MoreUK regulator fines Barclays over gold price setting

Platinum group metals rose on Monday on continued concerns about supply from major producer South Africa, where a strike in platinum mines is now in its fifth month.

Platinum rose 1 percent to $1,480 an ounce, not too far from an 8-1/2 month high hit last week. Palladium gained 0.4 percent to $827.60 an ounce, near a 2-1/2 year peak.

The strike in South Africa - the longest bout of industrial action in the country's history - has turned violent. Five people were murdered in communities around the mines last week, and the latest round of wage negotiations, mediated by a labor court judge, have made little headway.

Silver fell 0.1 percent to $19.38 an ounce.