PRECIOUS-Gold falls more than 1 pct as Ukraine tensions ease

    * Putin orders troops in western Russia back to base 
    * Gold pulls back from 4-month high, remains underpinned 
    * India trade minister suggests easing curbs on gold imports 
 
 (Updates prices, adds comment) 
    By Jan Harvey 
    LONDON, March 4 (Reuters) - Gold prices fell more than 1 
percent on Tuesday, retreating from the previous day's 
four-month high, after President Vladimir Putin said Russia 
would only use military force in Ukraine as a last resort.  
    The precious metal rallied nearly 2 percent on Monday as 
investors, alarmed by East-West tensions, piled into bullion and 
government debt. Crude oil futures climbed while stock markets 
plunged. 
    Those moves went into reverse early on Tuesday, with world 
shares and hard-hit Russian assets recovering some lost ground 
after Putin's remarks.  MKTS/GLOB  [ID:nL6N0M12B5 
    Putin said Russia reserved the right to use all options in 
Ukraine to protect compatriots, but any use of force would be 
"absolutely" the last resort.  
    Financial assets failed to retrace the whole of the sharp 
moves seen globally on Monday. 
    Spot gold    fell as low as $1,331.39 an ounce and was 
down 1.2 percent at $1,334.20 by 1251 GMT. U.S. gold futures 
   for April delivery were down $16 an ounce at $1,334.30. 
    "We need to hold Friday's lows, otherwise a deeper 
correction could be looming," Ole Hansen, Saxo Bank's head of 
commodity strategy, said. "The Ukraine situation has eased but 
not gone away so we will continue to see market reactions to 
news from the region, but at least the risk of war, which was 
the main driver for gold, has now been reduced." 
    "Hedge funds have taken over the baton from (reduced) 
physical buyers in China, and as they are much quicker to react 
to changing sentiment, the risk has suddenly switched back to 
the downside," he added. 
    Putin said at the weekend that he had the right to invade 
Ukraine to protect Russian interests and citizens following 
months of popular unrest. Russia's Black Sea Fleet has a base in 
Ukraine's Crimea region.    
    But the military exercises in central and western Russia, 
which raised fears that Russia might send forces to 
Russian-speaking regions of east Ukraine, were completed on 
schedule. 
    Gold remains up 0.6 percent this week, having reached its 
highest since Oct. 30 on Monday at $1,354.80 an ounce.  
    However, its could be vulnerable to data releases later this 
week, VTB Capital analyst Andrey Kryuchenkov said, including ADP 
jobs figures on Wednesday, a European Central Bank statement on 
Thursday, and Friday's U.S. nonfarm payrolls.    
    "Gold is a sell ahead of macro headlines this week, bar 
geopolitical tensions, with an overhang of speculative longs, 
easing physical flows and a potentially stronger dollar," he 
said.  
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
    GRAPHIC-2014 metal returns:  http://link.reuters.com/cag37s 
    GRAPHIC-2014 commod returns: http://link.reuters.com/reb25t 
    GRAPHIC-Gold/platinum ratio: http://link.reuters.com/xez92s 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
     
    CONSUMER DEMAND SOFTENS  
    In the physical market, dealers in Singapore noted selling, 
which kept premiums for gold bars unchanged at 80 cents to $1 an 
ounce to spot London prices. 
    "The current price premiums ... show that consumer demand is 
tapering," said Joyce Liu, investment analyst at Phillip Futures 
in Singapore. 
    Weakening differentials between 99.99 percent purity gold 
   on the Shanghai Gold Exchange and cash gold were 
likely to crimp demand from China.  
    India's trade minister said on Tuesday he had raised the 
issue of easing some curbs on gold imports with the finance 
ministry, as the restrictions were encouraging smuggling and 
hurting the gems and jewellery industry.    
    India lost its spot as the world's biggest gold consumer to 
China last year, after the government imposed the restriction on 
imports to narrow the current account deficit. 
    Among other precious metals, silver    was down 1 
percent at $21.17 an ounce, while spot platinum    was down 
1 percent at $1,439.50 an ounce and spot palladium    was 
down 0.4 percent at $743.40 an ounce. 
    South Africa's Association of Mineworkers and Construction 
Union on Tuesday lowered its wage demands for the first time, 
raising hopes of a breakthrough after nearly six weeks of 
strikes at the world's top platinum producers.    
 
 (Additional reporting by Lewa Pardomuan in Singapore; Editing 
by Dale Hudson/Ruth Pitchford) 
 ((jan.harvey@thomsonreuters.com)(+44)(0)(207 542 7744)(Reuters 
Messaging: jan.harvey.thomsonreuters.com@reuters.net)) 
 
Keywords: MARKETS PRECIOUS/