Gold prices held steady near $1,230 an ounce in Europe on Monday as uncertainty over the outlook for the global economy continued to support investment in the precious metal as a safe store of value.

Spot gold was bid at $1,226.60 an ounce at 0939 GMT (5:39 a.m. EDT), against $1,226.95 late in New York on Friday. U.S. gold futures for December delivery eased 90 cents to $1,227.90.

The precious metal rallied to a 1-1/2 month high at $1,237.15 an ounce last week after a spate of lackluster U.S. data knocked confidence in the economic recovery, boosting interest in the metal as a haven from risk.

Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust rose by nearly 13 tonnes last week, their biggest one-week rise since early June.

Clearly the ongoing concerns about growth and the fall in some riskier assets -- equity markets, industrial commodities -- have seen more inflows into the gold market, as evidenced by the inflows into ETFs, said Credit Agricole analyst Robin Bhar.

There seems to be that diversification and safe haven angle that gold is benefiting from, and that is continuing to buoy the market, he added.

With last week's simmering risk aversion taking a breather on Monday, allowing the euro-dollar exchange rate and oil prices to steady and equity markets to firm, further gains in gold have been limited, but it remains firmly underpinned.

Gold is a risk aversion, safe haven play for the time being. That is the dominant factor with all the continued uncertainty, said Bhar.

Ten-year German bunds remain near the record highs they hit on Friday against a deteriorating economic backdrop.


The euro was under pressure on Monday, hurt by concerns over the euro zone economy, which have seen short positions in the single currency extended, but managed to stay broadly flat against the dollar.

Meanwhile, European shares rose and world stocks stabilized above last week's one-month low as an encouraging euro zone business survey and positive corporate merger activity news helped soften concerns about a slowdown. .EU

In the United States, data from the Commodity Futures Trading Commission showed a fourth consecutive weekly rise in speculative net long positions in New York gold futures in the week to August 17, according to Commerzbank.

At 18,600 contracts or 11.7 percent, the rise was even sharper than before in this reviewed period, it said. Net long positions of 177,000 contracts is also the highest level since the start of July.

This shows that financial investors have been a major force in this recent rally of gold prices, it added.

However, high prices weighed on jewelry demand in major gold consumer India. Dealers in Mumbai reported a retreat in wholesale gold demand as stockists awaited a fall in prices.

Among other precious metals, silver was at $17.95 an ounce against $17.98. Platinum was at $1,506 an ounce against $1,506.50 and palladium at $475 against $473.

Gold has become increasingly expensive compared with the industrial precious metals in recent weeks as concerns over the outlook for economic growth have increased. The ratio of gold to platinum and silver has risen to its highest since early June.

(Reporting by Jan Harvey; Editing by Alison Birrane)