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London - Gold edged back above $1 290 an ounce on Thursday as a softer dollar and renewed tensions in Ukraine helped arrest the previous day's 1% fall.
Traders are also awaiting a news conference by European Central Bank president Mario Draghi after the central bank left interest rates unchanged.
On Wednesday gold posted its biggest daily fall since April 15 as traders frustrated by its failure to break above $1 315 took Russian President Vladimir Putin's assertion that he was willing to negotiate over Ukraine as a signal to sell.
Putin's announcement that he was pulling Russian troops back from the Ukrainian border and his call on pro-Moscow separatists to postpone a vote on independence pulled prices from this week's three-week high at $1 315.60.
They crept higher however after separatists in Ukraine voted unanimously on Thursday in favour of holding a referendum on independence anyway.
Spot gold was up 0.3% at $1 292.90 an ounce at 11:56 GMT, while US gold futures for June delivery were up $4.60/oz at $1 293.50. Both spot prices and futures remain near their lows for the week.
"If this conflict is going to calm down and the US economy remains positive, it should be a positive environment for stocks and negative for gold, as investors go back to riskier markets where the return prospects are better than for gold," Peter Fertig, a consultant at Quantitative Commodity Research, said.
European stocks rose on Thursday, lifted by reassuring corporate results and better-than-expected Chinese trade figures. The dollar index edged down 0.2%.
"Today sees the ECB meeting at which ECB President Mario Draghi will have to nail his colours to the mast," Commerzbank said in a note.
"If the press conference were to spark any EUR-USD response, this would doubtless also impact on the gold price."
The ECB was expected to take heart from signs of life in the eurozone economy and keep interest rates unchanged at 0.25%, resisting pressure to act in the face of a stronger euro currency and persistently low inflation.
Chinese buying muted
Despite Wednesday's price drop, buying interest among Chinese dealers on the Shanghai Gold Exchange was relatively muted overnight, Swiss bullion house MKS said in a note.
"The market was expecting them to come in as buyers, yet despite the SGE premium sitting at its highest point in some time ($3-4 premium over Loco London), it failed to attract any reasonable buying interest," it said.
Silver underperformed the other precious metals, falling 0.1% to $19.34/oz. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, edged back up to 67.1 from 66.8 on Wednesday.
Last week it hit its highest since August 2010 at 67.6, putting silver at its cheapest compared to gold in more than three-and-a-half years.
Spot platinum was up 0.8% at $1 439.30/oz, while spot palladium was up 1.1% at $804.10/oz.
The two metals have been supported by the platinum sector strike which has been running since January 23, but palladium in particular retreated on Wednesday as tensions between Russia and the West abated.
Traders are also awaiting a news conference by European Central Bank president Mario Draghi after the central bank left interest rates unchanged.
On Wednesday gold posted its biggest daily fall since April 15 as traders frustrated by its failure to break above $1 315 took Russian President Vladimir Putin's assertion that he was willing to negotiate over Ukraine as a signal to sell.
Putin's announcement that he was pulling Russian troops back from the Ukrainian border and his call on pro-Moscow separatists to postpone a vote on independence pulled prices from this week's three-week high at $1 315.60.
They crept higher however after separatists in Ukraine voted unanimously on Thursday in favour of holding a referendum on independence anyway.
Spot gold was up 0.3% at $1 292.90 an ounce at 11:56 GMT, while US gold futures for June delivery were up $4.60/oz at $1 293.50. Both spot prices and futures remain near their lows for the week.
"If this conflict is going to calm down and the US economy remains positive, it should be a positive environment for stocks and negative for gold, as investors go back to riskier markets where the return prospects are better than for gold," Peter Fertig, a consultant at Quantitative Commodity Research, said.
European stocks rose on Thursday, lifted by reassuring corporate results and better-than-expected Chinese trade figures. The dollar index edged down 0.2%.
"Today sees the ECB meeting at which ECB President Mario Draghi will have to nail his colours to the mast," Commerzbank said in a note.
"If the press conference were to spark any EUR-USD response, this would doubtless also impact on the gold price."
The ECB was expected to take heart from signs of life in the eurozone economy and keep interest rates unchanged at 0.25%, resisting pressure to act in the face of a stronger euro currency and persistently low inflation.
Chinese buying muted
Despite Wednesday's price drop, buying interest among Chinese dealers on the Shanghai Gold Exchange was relatively muted overnight, Swiss bullion house MKS said in a note.
"The market was expecting them to come in as buyers, yet despite the SGE premium sitting at its highest point in some time ($3-4 premium over Loco London), it failed to attract any reasonable buying interest," it said.
Silver underperformed the other precious metals, falling 0.1% to $19.34/oz. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, edged back up to 67.1 from 66.8 on Wednesday.
Last week it hit its highest since August 2010 at 67.6, putting silver at its cheapest compared to gold in more than three-and-a-half years.
Spot platinum was up 0.8% at $1 439.30/oz, while spot palladium was up 1.1% at $804.10/oz.
The two metals have been supported by the platinum sector strike which has been running since January 23, but palladium in particular retreated on Wednesday as tensions between Russia and the West abated.
