Gold rose to close to $890 per ounce on Monday on bargain-hunting, after falling 1 percent last week, but trade was sporadic as many key markets were closed for the Easter holiday. US financial markets will reopen on Monday after the Good Friday holiday on April 10. But markets in Australia, Hong Kong, Britain and most countries on the continent remain closed on April 13.
"The momentum is being kept, and those who have gone short in Tokyo are being squeezed," said Kaname Gokon, deputy general manager at Okato Shoji Cos research section. Behind the resilience in gold prices late last week despite a global stock market rally was a fresh inflow of money underpinning the precious metal, Gokon said.
Spot gold was at $888.10 per ounce by 0456 GMT, up 0.85 percent from Fridays notional close of $880.65 and 2.75 percent above a recent low of $864.30 on April 6, the lowest since January 23. It fell 1.3 percent last week as some investors unwound safe-haven positions and moved to other assets, including stocks.
"But other centres are quiet. The market gets rolling once people outside Tokyo get up and ready," Gokon said, adding that the market is supported by expectations that physical demand will emerge at $850-$860. Mondays firmness partly reflected caution over US corporate earnings, which get into full swing later this week, traders said.
Also, data on US retail sales on Tuesday mark the start of a flow of US data for investors to gauge if Wall Street shows signs that it has put last months decade lows behind it.
The euro stayed under pressure on the view that the European Central Bank may be edging closer to unconventional easing at its next policy-setting meeting in May. The euro was quoted at $1.3165, not far from a low on Friday of $1.3090, a level not seen since mid-March.
The currency market has been watching for signs the ECB will take unconventional steps to improve credit after similar moves by the Federal Reserve and other major central banks to keep longer-term interest rates down and help keep their economies and financial systems from deteriorating.
Such inflationary measures, along with massive fiscal stimulus packages recently announced by various countries, are bullish for gold and other commodity prices. The worlds largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings as of April 10 remained unchanged at a record 1,127.68 tonnes, a level reached the previous day.