Gold rose on Monday, as the dollar edged lower on renewed oil market weakness and concerns over the global economic outlook which have raised questions about the Federal Reserve's pace of interest rate tightening. The Federal Open Market Committee meets this week and is widely expected to leave its federal funds rate unchanged at 0.25-0.50 percent on Wednesday.
Spot gold was up 0.8 percent at $1,106.21 an ounce at 1514 GMT, extending a near 1 percent increase made last week, when investor appetite for risk evaporated on worries China's economic growth is slowing down.
"There is a greater consensus that there is going to be a further decline in financial asset classes (equities) this year," said Ross Norman, CEO of bullion broker Sharps Pixley.
"But I don't think we are going to see Armageddon or a complete wipe-out; more likely a correction in the markets."
US gold for February delivery gained 1 percent to $1,107 an ounce.
Gold had scaled a two-month high of $1,112 on January 8, but lacked upward momentum before steadying mostly below $1,100.
"Gold's technical picture is slowly improving but a more sustained rally could only be confirmed by a break above $1,112-$1,113," said ActivTrades chief analyst Carlo Alberto de Casa.
Gold fell more than 10 percent last year, on expectations that higher US interest rates would hit demand.
The Fed lifted rates for the first time in nearly a decade in December and hinted at gradual increases in 2016.
But a possible consumer pullback could now derail the US central bank's tightening plans.
Expectations for a March rate increase are starting to fade, and economists polled by Reuters now forecast three hikes in 2016 rather than the four initially floated by the Fed.
The US government will release its first reading on fourth-quarter economic growth on Friday. Economists polled by Reuters suggest US GDP growth of 0.80 percent in October-December and annual expansion of 2.5 percent in 2016.
Hedge funds and money managers increased their bullish bets in COMEX gold in the week to January 19, and boosted their positive bets in silver to the highest in more than two months, US Commodity Futures Trading Commission data showed on Friday.
Spot silver rose 1.6 percent to $14.23 an ounce and palladium gained 0.6 percent to $494.50. Platinum climbed 3.3 percent to $861.50 per ounce, regaining some lost ground after falling to a seven-year low of $806.31 last week.
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