Gold prices rose in Asian trade on Monday as investors' appetite for riskier assets faded on concerns about a potential US recession and decelerating global growth, increasing appeal for the bullion alongside yen and bonds. Spot gold gained 0.3 percent to $1,316.40 per ounce as of 0800 GMT, while US gold futures also added 0.3 percent to $1,316.50 an ounce. The metal last week posted its third consecutive weekly gain and rose 1 percent, the most since the week ended Feb. 1.
Investors dumped shares and fled to the safety of bonds, while the Japanese yen hovered near a six-week high.
"Market is in a risk aversion mode. It seems that the data from Friday night, of US and Europe, didn't come as expected," said Michael McCarthy, chief market strategist, CMC Markets.
Data on Friday showed that US manufacturing activity unexpectedly cooled in March and businesses across the euro zone performed much worse than expected this month, fanning concerns on global growth.
"If data continues to be as weak as forecast then there is very good chance we could see significant higher gold prices," McCarthy said, adding that the inversion of yield is a sign of concern.
"Gold is set to make another run for the $1,350 price level that has proved resilient," OANDA said in a note.
"Volatility fuelled by uncertainty and with plenty of Fed speakers expected to reinforce the dovish rhetoric from the central bank, the US dollar will be limited on the upside."
Indicating appetite for the safe-haven bullion, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose about 1 percent in the previous week.
Investors also raised their bullish wagers in COMEX gold in the week to March 19, the US Commodity Futures Trading Commission (CFTC) said on Friday.
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