* Spot gold targets $1,280-technicals
* Coming Up: U.S. personal income July; 1230 GMT
(Adds comments from ANZ)
By Lewa Pardomuan
SINGAPORE, Aug 29 Gold was little changed on
Friday but was on track to post a monthly gain, as growing
tensions between Russia and Ukraine stoked safe-haven demand for
the precious metal.
And while purchases from jewellery makers have helped gold
bounce from a two-month low hit last week, the bullion still
lacked strength to regain the key level of $1,300 due to
concerns over a looming U.S. interest rate hike.
Ukraine's president said on Thursday that Russian troops had
entered his country in support of pro-Moscow rebels who captured
a key coastal town, sharply escalating a separatist war and
prompting anger and alarm among Kiev's Western allies.
Gold was trading flat at $1,288.59 an ounce at 0608
GMT. Prices are poised to climb 0.5 percent in August, after
dropping 3.4 percent in the previous month.
"Anything above $1,300 will attract some selling. We have to
see if the situation in Ukraine is worsening," said Ronald
Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
"Sentiment is not so bullish for gold. We have to see when
interest rates will start to go up," Leung said.
Higher interest rates would dull gold's appeal, and pressure
is building within the Federal Reserve to more clearly
acknowledge improvements in the U.S. economy as early as next
month and lay the groundwork for the central bank's first
interest rate hike in nearly a decade.
The U.S. economy rebounded more strongly than initially
thought in the second quarter with a bigger chunk of the growth
driven by domestic demand in a bright sign for the future.
U.S. gold was little changed at $1,289.70 an ounce.
Asian shares slumped on Friday, after flaring Ukraine
tensions spoiled investor risk appetite and bolstered the
safe-haven yen, while the euro was on track to post its second
straight month of declines.
"Downside risk remains for gold over the next few months as
Chinese physical demand remains on the sidelines. As China's
demand for physical gold slows from the frenzied levels of 2013,
onshore stocks of gold look elevated," ANZ said in a report.
"As demand from China remains lacklustre, a further move
lower in prices will be required to stoke interest from the key
consumer. We expect China to import, through Hong Kong, 750-800
tonnes of gold in 2014, down from 1,158 tonnes last year."
Net gold flows into China from Hong Kong dropped to 22.107
tonnes in July versus 40.543 tonnes in June, the lowest in three
years, data showed on Monday.
The physical market in Asia saw purchases from jewellery
makers this week, but buying interest began to subside as prices
Premiums for gold bars stood at 80 cents to $1.10 to the
spot London prices in Hong Kong, and at 80 cents $1.00 in
Singapore. In Tokyo, gold bars were on par with London prices.
"It's the summer season and it's normally very quiet.
Dollar-priced gold is also increasing. I can't see buying or
selling at the moment," said a physical dealer in Tokyo.
Precious metals prices 0608 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1288.59 -1.15 -0.09 6.94
Spot Silver 19.50 -0.05 -0.26 0.46
Spot Platinum 1421.50 1.50 +0.11 3.95
Spot Palladium 893.10 0.10 +0.01 25.26
COMEX GOLD DEC4 1289.70 -0.70 -0.05 7.31 8033
COMEX SILVER SEP4 19.51 -0.02 +0.00 0.72 205
(Editing by Muralikumar Anantharaman and Subhranshu Sahu)