Gold rose to a four-month high above $970 an ounce on Monday as lingering fears of financial market instability and rising inflation boosted buying of the metal for its safe haven appeal. Spot gold climbed $970.70 an ounce - the highest since March 19 - before easing to $968.15/$969.150 an ounce at 1509 GMT from $963.00/965.00 late in New York on Friday.
Gold has soared since fears over the future of US mortgage firms Fannie Mae and Freddie Mac came to the fore on Friday, dragging down equities and the dollar. Gold dipped earlier on Monday after a firmer tone in the US dollar encouraged pockets of profit-taking. However the dollar later retreated as stocks fell.
Bullion held by the New York-based SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, jumped to a historic high of 705.90 tonnes on Friday amid nervousness over Fannie Mae and Freddie Mac.
Investment bank UBS on Monday raised its short-term gold price forecast to $1,000 an ounce over the next month, against a previous forecast for $900, citing heightened risk aversion and ETF holdings.
Gold hit a record above $1,000 per ounce in March on a combination of historic dollar weakness, rising oil prices and widespread financial market fears in the wake of the near collapse of Bear Stearns. However, slowing physical demand from jewellers in response to higher prices continues to weigh on gold, with Turkish gold exports on Monday reported to have fallen by 25.5 percent to 5.8 tonnes in June.
Spot platinum rose to $2,0085.00/2,028.00 an ounce from $2,023.00/2,043.00 late in New York on Friday. Spot palladium eased to $446.50/454.50 an ounce from $448.50/456.50 an ounce. Silver tracked gold higher to trade at $19.00/19.06 an ounce from $18.76/18.84 late in New York on Friday.