Further monetary easing would likely boost inflation, driving investors to gold as it is seen as a good hedge against rising prices.
Data earlier on Monday showed Japan’s economic growth slowed much more than expected in the second quarter, after a string of figures on Friday suggested that China’s pro-growth measures have been insufficient.
“The sentiment (on gold) has gotten better in the past few days with investors focusing on central banks,” said Dominic Schnider, an analyst at UBS Wealth Management in Singapore.
Schnider said gold could test its 200-day moving average near $1,650 around the U.S. Federal Reserve symposium, slated to take place late this month in Jackson Hole, Wyoming, and expected to shed light on the central bank’s attitude towards further stimulus.
Spot gold had gained 0.3 percent to $1,623.49 an ounce by 0329 GMT, after posting a weekly rise of nearly one per cent. The U.S. gold futures contract for December delivery inched up 0.2 per cent to $1,626.50.
Spot gold could rise to $1,632 an ounce during the day, said Reuters market analyst Wang Tao.
Hedge funds and money managers cut their net long position in U.S. gold futures and options by 11 percent in the week to Aug. 7, following a 35-percent surge in the previous week, data from the U.S. Commodity Futures Trading Commission showed.
GOLD-PLATINUM PREMIUM HITS RECORD HIGH
Gold’s premium to platinum rose to an all-time high above $228 an ounce, as platinum remained under pressure from gloomy economic prospects. Gold has been at an average $194 discount to platinum since January, 1985.
Prices of spot platinum, mainly used to produce autocatalyst and jewellery, edged up 0.2 percent to $1,395.25, after falling for six weeks in a row. So long as the global economy does not show signs of improvement, platinum’s suffering is likely to continue and the spread could widen further, analysts said.
In South Africa’s troubled platinum sector, two security guards were hacked to death at a mine operated by the world’s number three platinum producer Lonmin on Sunday in new violence between rival unions, company officials said.