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 US 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 eurozone.
Gold added $2.15 to $1,229.10 an ounce by 0543 GMT, having hit an intraday high of $1,230.10. Bullion had rallied to $1,237.15 last Thursday, its strongest since early July, after new US 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. US gold futures for December delivery rose $2.4 to $1,231.2 an ounce after settling $6.60 lower on Friday.
Cash gold and US futures powered to a lifetime high in June on worries the euro debt crisis and the US economy was slowing, but attempts to revisit this year's peak were met by profit taking.
The euro held near a five-week trough, 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. Jewellers 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 jewellers 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.
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