Gold rose early on Monday as the dollar fell on uncertainty about global economic growth, while the prospect of more economic stimulus from China also increased bullion's investment appeal. Gold was on track for its fifth rise in the past six sessions after the dollar index fell on growth concerns and worries that the Federal Reserve may wait longer to hike US interest rates. Last week, the greenback notched its biggest weekly loss in six months.
Also underpinning gold was Chinese economic data suggesting the economy likely grew in the third quarter at its weakest pace in more than five years. This had some investors speculating that Beijing may roll out more stimulus measures. Gold got a boost from a strong rebound in Chinese imports of industrial commodities in September. But some market watchers said bullion looks vulnerable to further losses on an improving US economic outlook. Last week, the metal tumbled to a 15-month low of $1,183.46, near a four-year low, following strong US jobs data for September.
"While the potential for a short-covering rally could see gold extend its gains, we believe the bounce is likely to be short lived and remain cautious given the headwinds the macro environment presents," said Suki Cooper, precious metals analyst at Barclays Capital in New York. Spot gold rose 0.4 percent to $1,228.20 an ounce by 12:31 pm EDT (1631 GMT), having hit $1,237.30, its highest in nearly four weeks.
Last week, gold posted its biggest weekly gain in four months, up 2.7 percent. US COMEX gold futures for December delivery were up $6.60 to $1,228.30 an ounce. Gains in gold, usually seen as a hedge against oil-led inflation, were limited by sliding Brent crude oil prices to their lowest levels since 2010. Meanwhile, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a good proxy for market sentiment, fell 2.64 tonnes on Friday to 759.44 tonnes, its lowest level since December 2008.
In the Asian gold trading, Singapore launched 25 kg (around 804 ounces) gold contracts on Monday, the latest Asian country to start exchange-traded contracts with the aim of providing a regional benchmark price. Among other precious metals, silver inched down 0.1 percent at $17.33 an ounce. Platinum rose 0.8 percent to $1,260.49 an ounce, and palladium gained 0.3 percent to $781.50 an ounce.
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