Gold rose to its highest in a week on Monday, riding on a recovery in stock markets and a weaker US dollar against the euro before profit-taking erased some of its gains.
Gold has bounced around 4% since tumbling to a one-month low last Thursday, when softer equities forced investors to cash in to cover losses. Platinum extended gains on bargain hunting, with prices trading over 50% below a record peak hit last March.
Gold rose as high as $US845.55 an ounce, its highest level since Jan. 12, before slipping to $US837.60 an ounce by 0024 GMT, down $US4.25 from New York's notional close as oil prices reversed course and slipped.
"The intact popularity of the metal with investors should be adequate to help stabilise the price at or at least just
under the $US800 mark," precious metals group Heraeus said in a report, referring to a level last seen in November.
Dealers said record bullion holdings in SPDR Gold Shares boosted sentiment. Gold holdings in the world's largest gold exchange-traded fund jumped another 5 tonnes to 795.25 tonnes last week.
In other markets, the Nikkei rose 0.8%, while the euro firmed to $US1.33560 after a rally in stocks in Europe and
the United States revived investor optimism and some risk appetite.
But oil edged lower to around $US36 a barrel, having risen 3% in the previous session, which in theory reduced gold's safe-haven appeal.
"I guess the gold price has gone up too fast, so that's why we see some profit taking. I would say people are squaring off positions before Obama is sworn in," said a dealer in Hong Kong.
"I mean there's still a possibility the (US) dollar may get stronger again."
The incoming US administration and Britain on Sunday planned urgent and more forceful moves to reopen the world's clogged credit markets, and President-elect Barack Obama is preparing a "strong message" for banks after he takes over the US presidency this week.
Platinum was trading at $US955.50 an ounce, up $US9.00 from New York's notional close on Friday. More than 60% of platinum use goes to autocatalysts to clean exhaust fumes.
Bargain hunting from Japanese investors and buying by jewellers ahead of the Lunar New Year celebration next week
helped support platinum prices in recent weeks, but uncertainties lingered, said analysts.
More bad news for automakers emerged on Friday as manufacturers in Japan, Europe and the United States all warned their businesses continue to struggle and outlooks remained uncertain.
"Given this negative dynamic, support for platinum metals prices from its most importantdemand sector is foreseeably
going tobe missing this year," said Heraeus in a report.
"Despite this, we do not expect a complete collapse in the platinum-metals prices. As wehave been seeing for some months now, newproduction is going to slow down as well."
