Gold regained strength on Monday as bargain hunters resurfaced after prices dropped slightly in the previous session, while demand from investors was likely to offset gains in the U.S. dollar.
Recent poor data from the United States pointed to a faltering economy, and some investors also ditched the euro on worries of more economic weakness ahead in the euro zone.
Gold added $1.65 to $1,228.60 an ounce by 11:21 p.m.EDT, having hit an intraday high of $1,229.65. Bullion had rallied to $1,237.15 last Thursday, its strongest since early July, after new U.S. jobless claims hit a nine-month high.
I would still be thinking that investment is pretty positive for gold, especially if worries about the economic recovery continue, said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
If we can see a base forming at the $1,220 level, then I think gold will be well-poised to continue its upward trend. A low interest rate environment will continue to benefit gold, said Ong, referring to the Federal Reserve's pledge to keep short-term interest rates near zero.
U.S. gold futures for December delivery rose $1.3 to $1,230.1 an ounce after settling $6.60 lower on Friday.
Cash gold and U.S. futures powered to a lifetime high in June on worries the euro debt crisis and the U.S. economy was slowing, but attempts to revisit this year's peak were met by profit taking.
The euro slipped against the dollar, while Japanese shares extended losses on Monday on worries a strong yen would derail the fragile economic recovery, prompting some investors to turn to bullion as a safe haven.
Despite some bargain hunting from investors and speculators, overall trading was slow in the gold market. Jewelers were on the sidelines after making several purchases last week.
All is dead here. Gold is still stuck in the range which fails to spark any interest for both sides, said a physical dealer in Singapore. Some light selling continues. I think market looks to test lower this week.
On Friday, Indian jewelers shopped around before the start of Hindu festivals, while a strong baht helped Thai consumers defy a rise in bullion price to its highest in more than a month, keeping premiums for gold bars steady in Asia.
Oil rebounded as much as 0.7 percent to top $74 on Monday on a weaker dollar, but prices stayed close to last week's six-week lows on a combination of lackluster economic indicators, rising risk aversion and a lack of hurricane activity in the Gulf of Mexico.
Precious metals prices at 11:21 p.m. EDT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1228.60 1.65 +0.13 12.13
Spot Silver 17.98 0.00 +0.00 6.83
Spot Platinum 1514.00 7.50 +0.50 3.20
Spot Palladium 476.25 3.25 +0.69 17.45
TOCOM Gold 3382.00 -5.00 -0.15 3.77 15878
TOCOM Platinum 4186.00 -19.00 -0.45 -4.45 6949
TOCOM Silver 50.20 -0.80 -1.57 -2.90 446
TOCOM Palladium 1310.00 -13.00 -0.98 12.45 83
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Clarence Fernandez)