By Frank Tang and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold prices dropped more than 1 percent on Wednesday as investors took profits from a run-up spurred by geopolitical concerns, after Russian President Vladimir Putin urged Ukrainian separatists to postpone a referendum and said he was pulling troops back from their common border.
Putin called on pro-Moscow separatists in Ukraine to postpone the vote on secession just five days before it was to be held, potentially pulling Ukraine back from the brink of dismemberment.
However, the White House said it has seen no evidence that Putin has pulled Russian troops back from the Ukrainian border, and said it wants a referendum on secession to be cancelled, not merely postponed.
The dollar turned higher after Federal Reserve Chair Janet Yellen said in congressional testimony a high degree of monetary accommodation was warranted given "considerable" slack in the U.S. labour market and low inflation.
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"There are still some questions out there about the Ukraine situation, and whether the Fed will increase interest rates or leave them here, so all of these uncertainties are weighing down on gold," said Thomas Capalbo, precious metals trader at brokerage Newedge. Spot gold was down 1.4 percent at $1,289.39 an ounce by 3:07 p.m. EDT (1907 GMT), its biggest one-day drop in three weeks.
U.S. COMEX gold futures for June delivery settled down $19.70 an ounce to $1,288.90, with trading volume near 200,000 lots, the highest turnover since March 27, preliminary Reuters data showed.
Gold had risen to a high of $1,314.70 earlier Wednesday as fears that a stand-off between pro-Russian separatists and government troops in Ukraine could bring the country to war.
The metal also came under pressure after Yellen's comments affirmed a view that the Fed will end its asset purchases this fall as expected.
Jeffrey Sica, chief investment officer at Sica Wealth, which has more than $1 billion in client assets, said that gains in U.S. equities sapped momentum from the gold market. The S&P 500 index rose about 0.3 percent.
In physical market news, Chinese buying has been subdued as a weaker currency has discouraged importing banks from purchasing big quantities.
China's demand for gold bars fell nearly 44 percent in the first quarter of 2014 from a year ago, while total gold consumption edged up about 0.8 percent, the China Gold Association said on Wednesday.
Among other precious metals, silver tracked gold's weakness, falling 1.2 percent to $19.28 an ounce. Platinum fell 1.5 percent to $1,430.49 an ounce and palladium was down 2.3 percent to $795 an ounce.
Earlier this week the platinum group metals had risen due to miners' strike at major producers Anglo American Platinum, Impala Platinum and Lonmin, which began on Jan. 23 and has affected 40 percent of global output.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Susan Thomas, Dale Hudson, James Dalgleish and Nick Zieminski)
