Gold rose early on Monday, set to snap two straight losing sessions, boosted by renewed physical demand related to Diwali, India's major bullion-buying event this week. Earlier, gold rose to a high of $1,248.44 an ounce, near a one-month high as physical bullion demand picked up ahead of Diwali on Wednesday and the start of the Indian wedding season, when demand is traditionally the strongest.
Last week, the precious metal posted a second straight weekly gain despite closing lower on Thursday and Friday as global economic worries triggered safe-haven bids. However, a subsequent recovery in equity markets and resilient growth in the US economy could pressure gold prices in the near term, analysts said.
"(Physical) buying needs to pick up materially to overwhelm the gold-negative external drivers; in turn, we would continue to look for opportunities to short the rally," said Suki Cooper, precious metals analyst at Barclays Capital. Spot gold was up 0.5 percent at $1,244.30 an ounce by 12:03 p.m. EDT (1603 GMT). US COMEX gold futures for April delivery were up $5.80 an ounce at $1,244.80.
Demand from the leading centers of physical gold buying in Asia has been strong but may be set to abate, MKS said in a note on Monday. Sentiment in the broader financial markets showed some tentative signs of recovery, however. US Treasuries prices pared earlier gains Monday as the Standard & Poor's 500 and Nasdaq equity indexes turned higher, reducing earlier safety bids for low-risk government debt.
The world's largest bullion-backed exchange traded fund, SPDR Gold Trust, has also seen an uptick in investments. Its holdings rose 1.5 tonnes last week, its first weekly inflow since early September. Among other precious metals, platinum was up 0.5 percent at $1,260.10 an ounce, while palladium rose 1.4 percent at $761.05 an ounce. Silver was up 0.6 percent at $17.33 an ounce.
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