Gold was little changed near $1,410 an ounce on Monday but notched its biggest monthly gain since August as chaos in Libya and rising tensions across the Middle East prompted investors to buy the metal as a safe haven.
Despite its February gains, gold failed to test its record high set in December due to technical resistance, as financial markets had already factored in the geopolitical risk premium for gold, analysts said.
Unrest across the Middle East and North Africa, which unseated leaders in Tunisia and Egypt before spreading across Libya, Bahrain, Yemen and other countries, fueled a 5.5 percent rise in gold prices this month.
It requires some spreading of the political turmoil and an intensification in those other countries to see gold make much bigger gains, said Mitsubishi analyst Matthew Turner.
Turner said it will be difficult for gold to rise further after breaching $1,400 an ounce. Bullion set an all-time high of $1,430.95 an ounce on December 7.
Spot gold eased 0.2 percent to $1,406 an ounce at 2:40 p.m. EST (1940 GMT).
U.S. gold futures for April delivery settled up 60 cents at $1,409.90. Turnover for gold futures was 40 percent below its 30-day average, in line with recent lower-than-usual volume, preliminary Reuters data showed.
Foreign powers accelerated efforts to help oust Libyan leader Muammar Gaddafi on Monday as rebels fought government forces trying to take back strategic coastal cities on either side of the capital Tripoli.
Last week, gold posted its fourth consecutive weekly gain as the crisis in Libya and soaring oil prices stoked inflation worries.
Noncommercial net longs, or speculators' bullish position, rose 4 percent in the week up to February 22, Commodity Futures Trading Commission's latest trade data showed.
Silver gained 0.6 percent to $33.51 an ounce after rising for a fifth consecutive week last week. Prices have rallied 20 percent this month, their biggest one-month rise since May 2009.
The gold-silver ratio, which shows how many ounces of silver it takes to buy one ounce of gold, approached a 13-year low. Silver has risen amid limited supplies for near-term delivery and on prospects of rising demand for industrial metals as the economy recovers.
Hallgarten & Co, an investment research firm, said in a note that gold should benefit more as a safe haven than silver as investors focus on resurgent inflation and growing world tensions.
On charts, gold is still tracing out a large base to consolidate its recent move, and the metal is expected to hold in a range until it breaks above resistance near $1,425 an ounce, said Adam Sarhan, chief executive of Sarhan Capital.
DOLLAR DROP LIFTS GOLD
Gold was also supported by the U.S. dollar which fell to a 3-1/2 month low against major currencies and may extend losses on speculation Federal Reserve Chairman Ben Bernanke will continue to support stimulative policy when he testifies before the Senate Banking Committee on Tuesday.
A mixed bag of economic data failed to give bullion a clear direction.
U.S. consumer spending rose modestly in January, getting the year off to a soft start. Other data painted a bullish picture of the manufacturing sector, which should help the economy weather rising oil prices.
Markets are still wary of inflation as oil prices remained elevated after hitting 2-1/2 year highs last week on the back of tensions across the Arab world.
Among other precious metals, platinum edged down 50 cents to $1,802.99 an ounce and palladium gained 1.1 percent to $794.22.