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imageNEW YORK: Spot gold edged up on Wednesday as a lower dollar and lingering geopolitical tensions helped offset selling pressure from a record rally in US equities.

The dollar softened as traders focused on riskier assets, while speculation the European Central Bank will resort to monetary stimulus also triggered some interest in bullion, traders said.

On Wednesday, Ukraine accused Russian forces of launching a new military incursion across its border, a day after the leaders of both countries agreed to work toward ending a separatist war in the east of the country.

"The numerous sources of geopolitical crisis are evidently preventing the gold price from slumping," said Eugen Weinberg, head of commodity research at Commerzbank.

He said gold was currently trading around a key technical support at its 200-day moving average near $1,285 an ounce, but a possible dollar rally and rising US equities could still pressure bullion prices. Spot gold was up 0.1 percent at $1,282.26 an ounce by 12:31 p.m. EDT (1631 GMT).

US COMEX gold futures for December delivery underperformed spot, down $1.30 an ounce at $1,283.90. Trading volume was on track to finish below its 30-day average, preliminary Reuters data showed.

The yellow metal was on track to post a second consecutive day of gains while the S&P 500 equities index hovered around the 2,000 mark near its record high.

Gold was also supported after German consumer sentiment showed its biggest drop in more than three years. Also underpinning gold was ECB President Mario Draghi's call last week for more action on both the monetary and fiscal fronts.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a gauge of investor demand, fell 0.4 percent to 797.09 tonnes on Monday from 800.08 tonnes on Friday.

Among other precious metals, silver was up 0.5 percent at $19.44 an ounce, while platinum climbed 0.2 percent at $1,413.50 an ounce, and palladium was up 1 percent at $890.25 an ounce. Exchange-traded funds backed by palladium showed significant outflows.

Data on Tuesday from ETF Securities showed holdings of its UK-listed palladium exchange-traded product fell by 120,625 ounces, or 45 percent of its London-vaulted reserves.

Analysts said year-round active palladium buying in a tight physical market helped absorb the sizable volume of the metal brought onto the open market after the ETF outflow.

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