London: Gold steadied around $1,300 an ounce on Thursday as a lower dollar and accommodative US Federal Reserve monetary policy counterbalanced worries over the strength of Chinese demand and sales from gold-backed funds.

Holdings in the world’s biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on Wednesday, the biggest daily outflow since late December.

Spot gold was unchanged at $1,301.90 an ounce by 1348 GMT, while gold futures for June delivery were down 0.1 per cent to $1,301.80 an ounce. Volumes were seen thinning ahead of the Easter holiday break, traders said.

“Volumes are fairly low as traders start to square positions ahead of the Easter break,” VTB Capital analyst Andrey Kryuchenkov said.

“We are consolidating after the pullback we had at the start of the week but there is not much to push prices higher, there is no physical demand and the dollar is only marginally lower.” The metal had fallen nearly 2 per cent on Tuesday and has remained broadly rangebound since then around $1,300 on fears over slowing demand in top consumer China.

“What is rattling gold is talks of how much is being financed with gold in China, which for me is quite bearish because it means that the China’s physical demand story is not as strong as it was thought,” Societe Generale analyst Robin Bhar said.

A report from the World Gold Council earlier this week said that Chinese firms could have locked up as much as 1,000 tonnes of gold in financing deals, indicating that a big slice of imports has been used to raise funds due to tight credit conditions, rather than to meet consumer demand.

The dollar was down 0.2 per cent against a basket of currencies after Fed Chair Janet Yellen reiterated an accommodative monetary policy stance.

Her dovish remarks offset data suggesting that the US

economy was regaining momentum. US industrial production rose at a faster-than-expected clip in March, while the Fed’s Beige Book report showed economic activity picked up in recent weeks.

A pickup in economic growth would encourage investors to gain exposure in riskier assets, rather than buying gold as a form of insurance against risk, analysts said.

UKRAINE TENSIONS Any escalation in tensions between Russia and the West over Ukraine could offer some upside for bullion, analysts said.

Separatists flew the Russian flag on armoured vehicles taken from the Ukrainian army, humiliating a Kiev government operation to recapture eastern towns controlled by pro-Moscow partisans.

Foreign ministers from East and West will try to defuse the Ukraine crisis at their Geneva meetings on Thursday.

Physical buyers were also reluctant to purchase jewellery, bars and coins at current price levels as they see further downside to the metal, traders said.

China has been leading the drop-off in physical demand in Asia. Shanghai prices have been at a discount to spot prices for more than a month on soft demand and a weaker yuan, denting the incentive for banks to import.

Gold prices are likely to keep falling through 2015 after a second annual decline this year as US monetary policy normalises and investors switch to higher-yielding assets, the GFMS team at Thomson Reuters said in a report on Thursday.

Among other precious metals, silver was flat at$19.61 an ounce.

Platinum gained 0.2 per cent to $1,434.75 an ounce, and palladium was unchanged at 798 an ounce.