Gold firms on Ukraine tensions ahead of Fed testimony

LONDON, May 7 (Reuters): Gold firmed on Wednesday as concerns that a stand-off between pro-Russian separatists and government troops in Ukraine may escalate fuelled demand, and ahead of congressional testimony from Federal Reserve chair Janet Yellen later.
Investors are braced for the possibility that dovish comments at her congressional hearings will further undermine the dollar, which hit a 6-1/2-month low against a currency basket on Tuesday.
That would typically be expected to boost gold, which benefits from looser monetary policy and a soft dollar.
Spot gold rose 0.1 per cent to $1,308.60 an ounce by 1158 GMT. It touched a three-week high of $1,315.60 on Monday. U.S. gold futures for June delivery were up 20 cents an ounce at $1,308.80.
"Ukraine is keeping a bit of upside pressure on gold," Sharps Pixley Chief Executive Ross Norman said. "There are a lot of different drivers for gold out there. The dollar is normally looked on as the main one, but geopolitical tensions can trump that, and that seems to be what's happening here."
In Ukraine, both sides have been burying their dead as the country slides further towards war, with supporters of Russia and of a united Ukraine accusing each other of tearing the country apart.
On the wider markets, European stocks edged lower as a sell-off on other markets unsettled investors and results from brewer Carlsberg and bank Societe Generale showed the Ukraine crisis was starting to hurt large western companies.