Asian stocks slipped on Wednesday while the U.S. dollar held near a 11-month high, after Polish foreign minister Radoslaw Sikorski said Russia has gathered military forces at the border with Ukraine to either put pressure on the neighbouring country or to enter it.
Spot gold rose 0.2 percent to $1,289.80 an ounce by 0248 GMT, after closing flat in the previous session. U.S. gold was up about $6 to $1,291.20.
"Gold could face difficulty breaking through $1,300 because the dollar is doing really well," said Chen Min, a precious metals analyst at Jinrui Futures in Shenzhen.
"The only supporting factor is geopolitical tensions, and unless tensions escalate drastically over Ukraine, gold won't be able to gain much," she said.
Geopolitical tensions in Ukraine and the Middle East have largely been responsible for gold's 7 percent gain this year. Gold, often seen as alternative investment to riskier assets such as equities, could gain if stocks fall further.
Bullion investors continued to keep an eye on economic data, after a Tuesday report showed new orders for U.S. factory goods rose more than expected in June.
Recent U.S. data pointing to strengthening economic activity has weighed on gold's appeal on fears that monetary policy could soon be tightened.
The physical markets have failed to provide support to prices recently due to the seasonally quiet summer period. Premiums in top buyer China have been stuck at $2-$3 an ounce and demand is much weaker than last year, dealers said.
Chinese gold jewellery demand fell for the first time in eight years in the second quarter and could drop as much as 20 percent in the full year, a leading precious metals consultancy said last week.
Among other precious metals, silver ticked up after dropping to a seven-week low in the previous session on strong U.S. data and a higher dollar.