SINGAPORE (Reuters) - Gold traded below $1,300 an ounce on Tuesday, retaining losses from the previous session as strong U.S. data offset safe-haven bids from escalating tensions between Russia and the West.
Investors are now eyeing this week's U.S. jobs report and a Federal Reserve policy meeting to gauge further the strength of the world's largest economy and the central bank's stance on tightening monetary policy.
Spot gold was steady at $1,294.76 an ounce by 0333 GMT. Prices reached a 1-1/2 week high of $1,306.11 on Monday before ending down 0.6 percent on signs of a strengthening U.S. housing market.
"All eyes will be on the Fed statement and its future course of action. The U.S. jobs report on Friday could be of more significance as markets are expecting the labour market tocontinue improving following a winter slowdown," Hong Kong's Wing Fung Financial Group said in a note.
"Both data will have a significant adverse impact on gold. We expect the market to drop prior to the data releases," it said.
A strong economy could mean safe-haven demand for gold would slow, and the Fed could quicken its path towards a tighter monetary policy. The U.S. central bank has already been slowing the pace of its bond purchases.
In the latest sign that the economy is recovering well, data on Monday showed contracts to buy previously owned U.S. homes rose in March for the first time in nine months.
Meanwhile, tensions between the West and Russia over Ukraine remained high after the United States imposed new sanctions on allies of Russian President Vladimir Putin, prompting Moscow to denounce "Cold War" tactics amid more violence in eastern Ukraine.
The Ukraine situation has taken a backseat this week for gold as the focus is on the Fed meeting and other data releases, said one precious metals trader.
In the physical markets, data showed China's gold purchases via main conduit Hong Kong fell to a four-month low in March as a weaker yuan and domestic prices below the global benchmark kept banks from importing.
Shanghai prices have now recovered to a premium of about $1 an ounce but far below the $20 premiums seen earlier in the year, indicating demand still remains weak.
An increase in physical demand across Asia could at least provide a floor for falling gold prices.
Reporting by A. Ananthalakshmi; Editing by Himani Sarkar and Ed Davies