BENGALURU: Gold held near a five-month peak on Monday as a slide in global shares pushed investors to seek shelter in bullion, while waning expectations of US interest rate hikes next year also underpinned the metal's appeal.
Spot gold inched down 0.1 percent to $1,246.82 per ounce, as of 1044 GMT, after hitting its highest since July 11 at $1,250.55. US gold futures were steady at $1,252.4 per ounce.
Losses in global stock markets snowballed on Monday on worries over slowing growth and fears that a rise in US-China tensions could torpedo chances of a trade deal.
"It's really encouraging that gold has risen to $1,250 level at the same time when equities were soft and this really underpins gold's role as a safe haven," said Julius Baer analyst Carsten Menke, adding that bullion was also supported by the weakness in the dollar.
Gold last week posted its best weekly gain since March and has recovered about 8 percent from 19-month lows hit in mid-August.
"The $1,250 pivot remains in play and should create a support for gold should the greenback weakness persist, with top-side targets extending toward the 200-day moving average around $1,255," traders at MKS PAMP said in a note.
The dollar consolidated losses after posting its biggest weekly drop in more than three months last week as weak US data lowered expectations of more interest rate increases.
The US Federal Reserve is widely expected to raise interest rates at its Dec. 18-19 meeting, but the focus is on how many rate hikes will follow in 2019.
Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, in which it is priced.
"The main trend remains bullish, with investor interest still on the rise as shown by the exchange-traded fund (ETF) sector too, and expectations for a dovish Fed in 2019-2020 are certainly boosting the appeal of the precious metal," ActivTrades chief analyst Carlo Alberto De Casa wrote in a note.
Holdings in SPDR Gold Trust, the world's largest gold-backed ETF, rose 0.20 percent to 759.73 tonnes on Friday.
Among other precious metals, spot silver was down 0.5 percent at $14.54 per ounce, while palladium slipped 0.1 percent to $1,223.20.
Platinum edged 0.3 percent lower to $787.50 per ounce. Prices had slipped to their lowest since Sept. 12 at $779 in the previous session.