Gold prices rose from 2-month lows on Monday on value buying while the status of a 'reliable inflation-hedge' continued to help the yellow metal. Hopes of better economic data and expectations that President Obama may announce measures this week to strengthen stimulus programs also aided the risk-friendliness of global investors pushing up Treasury yields and helping many major equity markets firm up, traders said.

At 1131 GMT, gold for immediate delivery was at $1,345.85 per troy ounce, up from Friday's close of $1,342.44. At its intra-day high of $1,353.35, the metal was up 1.16 percent from Friday's 2-month low of $1,337.84.

There has been considerable correction in the last 2-3 weeks prompting retail investors who had stayed away from the market on price concerns to make a comeback. The risk-friendliness we see globally is another big support, Chennai-based Harish Galipalli, head of research at brokerage JRG Securities, told IB Times.

Gold's appeal as inflation-hedge has more meaning in China, India, Brazil and many other large markets. In India, retail investors were actively into buying on Monday, he added.

India's main share index ended at 19,151.28, up 0.8 percent on Monday. Japan's Nikkei was also up 0.7 percent on the first trading day of the week. UK's FTSE 100 was also trading higher in early trades.

People's Bank of China raised its policy lending rate by 25 basis points to 5.81 percent on Christmas day of 2010 and market participants expect more of that sort in 2011 as the world's second largest economy is visibly reeling under inflation pressure.

Reserve Bank of India is widely expected to raise its key rates at least by 25 basis points on Tuesday after last month's data showed wholesale price-based inflation rose to its highest in 10 months in the country.

While downside risks to growth have receded, upside risks to inflation have increased, RBI said in its macroeconomic review for the December quarter released on Monday.

Indian farmers are expected to be richer in the coming months as the ongoing winter harvesting leaves them with more money to buy gold for marriage and festival needs. Indian needs make one-fifths of global demand for jewelry.

February delivery gold futures contract on the CME was at $1,345.90 per troy ounce, from $1,341 on Friday. On Tokyo Commodity Exchange (TOCOM), the most traded December contract was trading at 3,602 yen per gram ($1,351.4 per troy ounce approximately) in the night session.

JRG Securities expects gold to trade in a range of $1,340-1,365 this week.

There are no key data due from the US on Monday but traders are waiting for Tuesday's December new home sales figures and FOMC rate decision before heading for December durable goods orders data on Thursday and fourth quarter GDP data due Friday. The Fed is not expected to alter its target rate from 0-0.25 percent range, which has been steady there for more than two years.

The US dollar was slightly higher on Monday but more or less hovered around the 2-month low against the euro, suggesting investors have ample reasons to turn long on gold against the greenback, despite its broad strength.

The US dollar index, a gauge that measures the currency's strength against majors, was at 78.44, up 0.33 percent from the previous day. The euro was worth 1.3554 dollars, not far away from 1.3667, its highest since November 22.