Gold slipped further from a three-week high on Monday as investors eyed firmer equity markets and outflows from the world's top bullion fund, but held above $1,300 an ounce on concern over the Middle East and Ukraine.
 Spot gold fell 0.2 percent to $1,307.09 an ounce by 0652 GMT, after hitting a three-week high of $1,322.60 on Friday. U.S. gold slipped about $3 to $1,308.50.

 "The only supporting factor for gold right now is the geopolitical situation. Though we have seen some easing in tensions over the weekend, the underlying problems have still not been resolved," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

 "Economic data and physical markets are not supportive of prices. Gold will range between $1,280 and $1,325 as long as geopolitical tensions remain."

 Asian stocks rose on Monday following Wall Street's rally as Moscow said it had finished military exercises in southern Russia, which the United States had criticized.

However, tensions remained high over the weekend. Artillery shells slammed into the outskirts of the Ukrainian city of Donetsk on Sunday as government forces tightened the noose around the rebel-held redoubt and called on pro-Russian separatists to urrender.

In the Middle East, the United States conducted a third day of air strikes on Sunday in Iraq against the Islamic State insurgent group. Israel and the Palestinians held their fire early on Monday at the start of a new 72-hour ceasefire proposed by Egypt.

Despite the risk-aversion sentiment, speculators cut their bullish bets on gold futures and options in the week to August 5, according to Friday data from the Commodity Futures Trading Commission.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.79 tonnes to 795.86 tonnes on Friday.

Physical buying in top consumers China and India has also been sluggish, while strong economic data in the United States has stoked fears of a tightening in monetary policy.

"The potential for geopolitical tensions to ease may leave gold vulnerable to the downside as the price premium built since mid-June may fade," HSBC analysts said in a note.