Gold prices rise again

Gold edged up toward $1,350 an ounce in Europe on Monday as lower prices attracted buyers after the metal's third consecutive weekly loss, but a more optimistic view of global growth limited fresh investment.

A dearth of safe-haven demand means the precious metal could struggle to make fresh headway after rising to a record high above $1,430 an ounce late last year, analysts said.

Spot gold was bid at $1,347.90 an ounce at 5:48 a.m. ET, against $1,342.25 late in New York on Friday. U.S. gold futures for February delivery rose $6.20 an ounce to $1,347.00.

The precious metal fell 1.4 percent last week to its lowest since late November as a spate of firmer-than-expected economic data, primarily from the United States, boosted interest in assets seen as higher risk at gold's expense.

"We have got a pretty robust macro backdrop despite some potential for European sovereign issues," said RBS analyst Daniel Major. "Our economists aren't in the camp that that is going to derail global growth and the global risk story."

"The safe-haven argument, which was the dominant theme last year, is unlikely to be repeated this year," he said. "We have already seen slowing interest in exchange-traded funds."

"In the near term there seems to be good physical buying in China and India on price weakness and that is providing a bit of support around the $1,350 level, but certainly the Western investment story has started to wane somewhat."

Prices took a boost from fresh investment in gold-backed ETFs after several weeks of outflows, with holdings of the largest, the SPDR Gold Trust, rising by more than 20 metric tons on Friday.

They are still down some 9 metric tons this year, however.

Bargain hunting helped gold shrug off gains in the dollar, which usually weigh on prices. Strength in the U.S. unit curbs gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

EURO RETREATS

The euro backed off a two-month high against the dollar, with political turmoil in Ireland highlighting uncertainties facing heavily indebted euro zone countries.

Ireland's junior coalition party withdrew from Prime Minister Brian Cowen's government on Sunday, signaling the end of a crisis-riddled administration and hastening an election due on March 11.

Meanwhile data released Friday by the Commodity Futures Trading Commission showed a third successive drop in the net speculative position in gold, bringing the net non-commercial long to its lowest since the week of July 26, 2009.

The data showed the silver speculative position rose last week by about 1.3 percent, partially offsetting the previous week's fall, while the platinum net non-commercial position staged its largest weekly rise in at least four years.

Platinum was at $1,818.99 an ounce against $1,824.00, while palladium was at $816 against $819.75. Silver was bid at $27.55 an ounce against $27.47.

Holdings of the world's largest silver ETF, the iShares Silver Trust, fell by 181 metric tons on Friday, their biggest one-day outflow since late November.

They are down by more than 527 metric tons since the beginning of the year, worth some $468 million at today's prices.

HSBC analyst James Steel said in a note that despite strong sales of silver coins by the U.S. Mint, prices were unlikely to ride out falling ETF holdings. "Strong coin demand is unlikely to make up for weaker ETF demand," he said.

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