Gold prices up over concern on Ukraine, China growth

Gold rose around one percent on Tuesday as fears of a slowdown in Chinese economic growth and worries about the crisis in Ukraine sapped appetite for risk.

Tensions over Ukraine continued to build and with diplomacy at a standstill, European Union governments said they were considering sanctions against Russia if it failed to respond positively to an initiative to calm the crisis.

Ukraine said it would raise a new national guard force in response to Russian attempts to annex Crimea, a day after a pro-Russian force opened fire while seizing a Ukrainian military base there.

"The situation in Ukraine in itself has led to some safe-haven buying but it is more the impact Ukraine has on equity markets and then the shifting of funds into gold," Quantitative Commodity Research owner Peter Fertig said.

"If the geopolitical situation worsens, we are likely to see more risk-off trade out of stock markets and that should continue to benefit safer assets like gold."

In times of economic and geopolitical uncertainty, gold is seen as an alternative investment to assets perceived as riskier.

Spot gold rose to a session high of $1,352.50 an ounce and was up 0.8 percent to $1,349.09 an ounce by 1247 GMT, while gold futures for April delivery rose 0.6 percent to $1,349.50 an ounce.

European equities were little changed, while the dollar rose 0.1 percent versus a basket of main currencies.

Traders expect gold to stay supported between $1,330 and $1,350 ahead of the U.S. Federal Reserve's policy meeting on
March 18-19.

The central bank is most likely to announce another $10 billion cut to its bond-buying stimulus after a series of U.S. economic data showing that growth has been hurt by severe cold weather.

Weak Chinese exports data for February is also making investors opt for safe-haven gold rather than equities.