Gold was flat on Tuesday after gaining in the previous two sessions but traded near its highest in three weeks as more intense fighting in Ukraine lifted the metal's safe-haven appeal.
Pro-Russian rebels shot down a Ukrainian helicopter in fierce fighting near the eastern town of Slaviansk on Monday, and Kiev drafted police special forces to the southwestern port city of Odessa to halt a feared westward spread of rebellion.
Spot gold was little changed at $1,308.96 an ounce by 0318 GMT, after gaining 2 percent in the last two sessions. On Monday, gold climbed to $1,315.60 - its highest since April 15, before paring some gains.
“Worsening tension in Ukraine is likely to see prices going higher from here but strong resistance is likely to be found at $1,317," said Joyce Liu, investment analyst at Phillip Futures.
"We may see an extended period of range-bound consolidation from here, as market seeks a new direction. In the absence of escalating tension in Ukraine, prices need only break the support at $1,307.50 to plunge another $10-$20 lower," Liu said.
Traders said they expect volatility in prices as the Ukraine situation develops, and that sentiment continues to be fragile due to outflows from gold funds.
SPDR Gold Trust, the world's top bullion-backed exchange-traded fund, saw its holdings drop by nearly 10 tonnes last week on strong US data as the Federal Reserve further cut its stimulus measures. Holdings are unchanged so far this week.
Gold is usually in demand as a safe-haven bet during times of political and economic uncertainty.
Reuters technicals analyst Wang Tao said gold could retrace to $1,292, as it could have completed a rebound from the April 24 low of $1,268.24.For all the latest GCC news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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