Gold logs weekly, monthly gains on Ukraine tensions

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Gold prices settled lower on Friday as stock markets wavered on both sides of the Atlantic, but the metal managed to log weekly and monthly gains.

Investors remain on edge over tensions between Russia and Ukraine after Ukraine said on Thursday that Russia had moved troops into the country. However, the impact of the escalating conflict has not been enough to sustain gold price increases.

U.S. gold futures for December delivery settled $3.00 lower at $1,287.40 an ounce, up 0.6 percent on the week. Meanwhile, spot gold was last down 0.3 percent at $1,286 an ounce.

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Prices rose 0.4 percent this month, having recovered after falling briefly to a two-month low at $1,273.06 last week. Spot prices have traded in a range of less than $50 in August, their narrowest spread in five years.

"(Gold) has not been able to determine what theme to latch onto," Saxo Bank's head of commodities research Ole Hansen said. "Activity remains subdued as a result."

Gold / US Dollar Spot

"The ECB meeting and U.S. job report (next week) may jolt it back to life, but currently it's on life support, having clocked the smallest weekly range in two months."

The euro lifted off lows and European shares sagged on Friday as a new five-year low in euro zone inflation was viewed as not extreme enough to drive the European Central Bank back into its increasingly bare policy cupboard.

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A recent run of positive U.S. data has fueled speculation the Federal Reserve will further pare its gold-friendly monetary stimulus measures, removing support from the precious metal.

U.S. consumer sentiment rose in August, while an index of current economic conditions hit its highest since July 2007, a survey released on Friday showed.

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The physical market in Asia saw purchases from jewelry makers this week, but buying interest began to subside as prices improved slightly.

Premiums to spot London prices for gold bars in Hong Kong stood at 80 cents to $1.10, and at 80 cents to $1.00 in Singapore. In Tokyo, gold bars were on par with London prices.

—By Reuters