* Contraction in US manufacturing sector underpins gold
* Liquidity thin as London closed for May Day holiday
* SPDR outflows totalled almost 10 tonnes last week
* Coming up: US international trade data Tuesday (Updates market activities)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 5 (Reuters) - Gold prices rose to a three-week high on Monday, extending the previous session’s gains as simmering tensions in Ukraine and a break above a key $1,300 an ounce technical level fuelled buying.
Dealers remained cautious on whether the gains can be sustained, however, as outflows from the top physical gold exchange-traded fund continued to indicate bearish sentiment.
Bullion’s safe-haven appeal increased after news that a street battle between supporters and opponents of Russia in southern Ukraine over the weekend killed at least 42 people, including dozens of pro-Russian protesters incinerated in a burning building, bringing the country closer to war.
“The further escalation of the situation in Ukraine has prompted gold purchases, especially on the futures market,” said Eugen Weinberg, head of commodity research at Commerzbank.
Global economic uncertainty after data showed a contraction in Chinese manufacturing that renewed concerns about a slowing economy in China also supported gold, and the market largely ignored a report showing upbeat U.S. service-sector activities.
Spot gold was up 0.8 percent at $1,309.84 an ounce by 4:14 p.m. EDT (2014 GMT), having earlier risen to $1,315.80 earlier, its highest since April 15.
U.S. COMEX gold futures for June delivery settled up $6.40 an ounce at $1,309.30.
Trading volume was in line with its 30-day average, preliminary Reuters data showed, even though the London markets were shut for the May Day holiday.
Weakness in investment has pressured gold in recent weeks. The SPDR Gold Trust, the world’s largest gold ETF, said its holdings fell 2.70 tonnes to 782.85 tonnes on Friday, bringing its outflow for the week to nearly 10 tonnes.
Among other precious metals, silver was up 0.7 percent at $19.59 an ounce.
Platinum group metals were underpinned after the world’s top platinum producers said on Monday that striking South African miners were afraid to accept the companies’ latest wage offer because of “threats to their personal safety”.
Platinum rose 0.9 percent to $1,444.50 an ounce and palladium climbed 0.9 percent to $814.77 an ounce. 4:14 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL US Gold JUN 1309.30 6.40 0.5 1299.70 1315.80 110,742 US Silver MAY 19.520 0.028 0.1 19.460 19.680 152 US Plat JUL 1448.40 7.70 0.5 1438.30 1454.90 6,416 US Pall JUN 816.50 4.10 0.5 809.55 818.50 3,116 Gold 1309.84 10.02 0.8 1300.03 1315.60 Silver 19.590 0.130 0.7 19.480 19.710 Platinum 1444.50 13.00 0.9 1437.50 1451.00 Palladium 814.77 7.07 0.9 810.50 816.50 TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 126,825 125,867 180,067 15.29 0.16 US Silver 28,015 64,578 55,902 23.01 0.22 US Platinum 6,541 8,601 12,471 15.25 -0.08 US Palladium 3,474 5,479 5,671 25.12 -0.95 (Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy, Susan Thomas, Marguerita Choy and Diane Craft)