LONDON—The spot price of gold held around $1,900 a troy ounce, just shy of the record set last month, as deepening concerns over global growth prompt investors to abandon riskier assets in favor of perceived safe havens.
Midday in London, spot gold was up $7.20, or 0.4%, at $1,891.40 an ounce, or just over $20 shy of the intraday record of $1,912.29 an ounce.
Liquidity may prove an issue and result in some choppy trading conditions, as U.S. markets are closed for the Labor Day holiday.
Friday's poor U.S. jobs report has been key in boosting gold, as it reignited speculation of additional easing measures that could further undermine the U.S. dollar, said Morgan Stanley analyst Hussein Allidina. The report showed the world's largest economy failed to add jobs for the first time in almost a year.
Europe, however, is likely to be a key focus for the financial markets this week, as policy makers start the process of ratifying changes to the euro-zone's bailout fund, known as the European Financial Stability Facility. The German constitutional court will also rule on the legality of the rescue package for Greece.
"Comments from officials in the weeks ahead are bound to play a key role in market sentiment, and the German court ruling on Wednesday will assist market nervousness," said UBS analyst Edel Tully.
A closely watched survey of business activity showed euro-zone economic growth slowed to a two-year low in August, adding to the appeal of safe-haven assets like gold.
Markit Economics' Purchasing Managers' Index for the region, a gauge of manufacturing and services activity, fell to 50.7 in August from 51.1 in July, meaning the euro-zone economy posted only marginal growth last month. A reading above 50 indicates an expansion in business activity.
Ms. Tully said European economic woes are again reclaiming the spotlight in world markets.
"Should negative headlines once again flood the wires, the fear trade, seen through demand for small bars and coins, is likely to accelerate," she said.
Market participants say a break to new record highs is only a matter of time given the current turbulence across world financial markets. Gold is widely viewed as an alternative store of value and safe haven amid times of economic uncertainty.
"Perceived safe-haven assets, like gold, should continue to benefit from uncertainty on both sides of the Atlantic, in our view," Mr. Allidina said.
The only real negative in the market Monday, market participants say, is an announcement by the Shanghai Gold Exchange that it will raise margins as well as upper and lower trading limits for gold and silver contracts, effective Friday. The margin for gold will be raised to 13% from 12%, while the margin for silver will be raised to 16% from 15%.
The margins and limits will, though, be restored to current levels, if they aren't breached, when traders return to the markets after the Mid-Autumn Festival long weekend, the exchange said.
Among other precious metals, spot silver was down 48 cents, or 1.1%, to $42.77 an ounce, spot platinum was off $3, or 0.2%, at $1,875 an ounce and spot palladium was down $4, or 0.5%, at $769 an ounce.
Write to Rhiannon Hoyle at rhiannon.hoyle@dowjones.com
