(Reuters) – On Monday, gold stabilized after touching its largest level in almost six weeks, still finding support from a smaller dollar and a drop in equities, which improved investor self-assurance in the metal.
Spot gold hit its largest grade since mid-December at $1,259.46 an ounce earlier and was trading raised 0.1% at $1,254.70 by 1116 GMT.
U.S. gold futures for February delivery increased $2.80 at $1,254.60 an ounce.
European shares bordered smaller, withdrawing from 5-1/2 year highs, while the dollar dropped 0.2% versus a basket of major currencies. Liquidity was anticipated to be thin with U.S. markets shut on Monday for a holiday.
Saxo Bank senior supervisor Ole Hansen said “Gold is grinding its way higher, but it’s not actually an explosion of interest that we are seeing in the move,”
The metal, often seen as an alternate buying into, has posted four straight weeks of profits – adding round 45 to its value.
The Commodity Futures Trading Commission showed on Friday that hedge funds and cash managers raised their bullish wagers in gold and shiny futures and options for a third week amid a decline in stocks.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded finance, increased 7.49 tonnes to 797.05 tonnes on Friday – the first increase in a month.
The price of gold dropped 28% last year, after a 12-year rally, on increasing optimism about an international financial recovery.
Due to the latest rally in gold charges, Chinese gold demand – which has been robust ahead of the Lunar New Year holiday at the end of the month – has come off somewhat as glimpsed on premiums and volumes on the Shanghai Gold Exchange.
Premiums for 99.99% purity gold eased to around $14 on Monday from $17 on Friday.
China’s National Bureau of Statistics showed jewelry sales in December increased 17% to 26.8 billion yuan ($4.43 billion), while sales for the whole year jumped 26% to 295.9 billion yuan ($48.91 billion).