By Frank Tang and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold edged up on Thursday after the previous day's more than 1 percent drop as investors digested comments by Federal Reserve Chair Yellen that the central bank is in no rush to reduce the size of its balance sheet.
Prices of the yellow metal were also supported by geopolitical tensions as Pro-Moscow separatists in eastern Ukraine ignored a call by Russian President Vladimir Putin to postpone a referendum on self-rule, a move that could lead to war.
Gold was pressured by technical selling and the dollar's strength after European Central Bank President Mario Draghi's comments that the bank may act to stem falling inflation at its June meeting knocked the euro.
"Bullion's inability to break over the 50-day moving average of $1,315 an ounce may have led to liquidations by disappointed investors," said James Steel, chief precious metals analyst at HSBC. "Weak prices near term may continue until geopolitical tensions or fresh physical buying halt losses."
The metal's ability to hold key technical support at its 100-day average near $1,285 triggered some buying, analysts said.
Spot gold inched up 0.1 percent to $1,290.11 an ounce by 2:55 p.m. (1855 GMT).
U.S. COMEX gold futures for June delivery settled down $1.20 an ounce at $1,287.70, with trading volume in line with its 30-day average, preliminary Reuters data showed.
The U.S. Federal Reserve is in no rush to decide the appropriate size of its balance sheet, but if it ultimately shrinks it to a pre-crisis size, the process could take the better part of a decade, Yellen said on Thursday in testimony to a Senate panel.
Among other precious metals, silver was down 0.8 percent at $19.15. Platinum gained 0.5 percent to $1,436 an ounce, while palladium rose 0.7 percent to $801.25 an ounce.
(Reporting by Frank Tang. Editing by Andre Grenon)
