Ukraine Crisis Forces Gold Prices to Three Week High

Gold traded close to a three-week high on Tuesday as increased violence in Ukraine pushed investors towards the safe-haven metal.

Pro-Russian militants shot down a Ukrainian helicopter in Slavyansk on Monday as deadly disorder spread through eastern Ukraine.

Kiev responded to violence in the Black Sea port city of Odessa by sending in police special-forces.

Spot gold remained steady at $1,310.16 an ounce at 0627 GMT, having gained 2% in the two previous sessions. On Monday, gold hit $1,315.60 an ounce before falling.

Uncertainty over the rising violence in eastern Ukraine has lifted the safe haven metal's appeal. Traders expect further volatility in the price of gold as Ukraine prepares to hold elections at the end of this month.

Joyce Liu, investment analyst at Phillip Futures, said prices could escalate further.

"Worsening tension in Ukraine is likely to see prices going higher from here but strong resistance is likely to be found at $1,317," she told Reuters.

Gold is often regarded as a safe investment in times of geopolitical uncertainty and the current crisis over Ukraine has already led to the worst standoff between Russia and the West since the collapse of the Soviet Union and the end of the Cold War.

Western powers united to condemn Russia's annexation of the Crimea as Washington and Brussels imposed two rounds of sanctions, consisting of asset freezes and travel bans against individuals with close ties to the Kremlin.

The prospect of further economic sanctions looks increasingly likely as the West accused Moscow of fomenting the unrest spreading throughout eastern Ukraine. A third round of sanctions is more likely to target entire sectors of the Russian economy and the White House has hinted they may target energy, mining or finance sectors.