Gold rose for a third consecutive session on Thursday as tensions in Ukraine increased and equity markets retreated, but analysts said the rebound could be short-lived due to strong U.S. economic growth data and the prospects of a U.S. interest rate hike.

NATO on Thursday said that well over 1,000 Russian troops are operating inside Ukraine, marking a significant escalation of Moscow's military involvement in the country.

Gold rose as much as 1 percent early in the day, but later trimmed gains after data showed the U.S. economy rebounded more strongly than initially thought in the second quarter. A bigger portion of the growth was generated by domestic demand, a bright sign for the future. "The market woke up on geopolitical headlines around Ukraine but we gave up some gains because of very strong U.S. economic data," said VTB Capital analyst Andrey Kryuchenkov.

Spot gold was up 0.6 percent at $1,289.99 an ounce by 2:25 p.m. EDT (1825 GMT).

On the New York Comex, gold futures settled up $7 an ounce at $1,290.40 an ounce. Trading volume was about 20 percent below its 30-day average, preliminary Reuters data showed.

Gold futures rose amid falling global equities and worsening international tensions after Ukraine accused Russia of bringing troops into the southeast of the country, and news more than 100 Russian soldiers were killed in eastern Ukraine in a single battle this month while helping pro-Russian separatists fight Ukrainian troops.

The dollar index edged up against a basket of currencies after data showed the number of Americans filing new claims for unemployment benefits fell for a second straight week last week. It was last up 0.10 percent at 82.499.

Encouraging data could increase already-high pressure within the Fed to more clearly acknowledge improvements in the U.S. economy as early as next month and lay the groundwork for the central bank's first interest rate hike in nearly a decade.

Spot silver rose 0.6 percent to $19.54 an ounce, rebounding from a two-month low of $19.25 hit last week. Spot platinum rose 0.8 percent to $1,421.25 an ounce, while spot palladium was up 0.6 percent to $894.50 an ounce.