London - Gold steadied near four-month highs on Monday, with investors cashing in some of the previous week's hefty gains, but prices remaining supported by volatility in wider markets which boosted the metal's appeal as a haven from risk.
A market rout after Switzerland unexpectedly abandoned a cap on the franc last week triggered strong bids for gold, often seen as an alternative to risky assets. That sent prices to their highest since September at $1,281.50 on Friday.
While it edged back from that level on Monday, gold remained supported as the market braced for further volatility in a critical week in the euro zone, traders said.
Expectations are high that the European Central Bank will unveil a bond-buying stimulus package at a policy meeting on Thursday, while the anti-bailout party Syriza maintains a lead in the polls going into Greece's general election on Sunday.
Spot gold was down 0.1 percent at $1,278.10 an ounce at 1218 GMT, while US gold futures for February delivery were up $1.40 an ounce at $1,278.30.
PROFIT TAKING
“There's a little bit of profit taking that's come in, and a little bit of physical selling - nothing huge yet, but it's the first time we've seen this level for a while, so people are a bit excited,” MKS' head of trading Afshin Nabavi said.
“But overall, gold is going the right way to reach $1,300, and if we can reach that, we can go much, much higher,” he said. “With the recent events in Switzerland, and the feeling that Europe may want to start quantitative easing on Thursday, gold has returned to being a safe haven.”
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, climbed 13.7 tonnes to 730.89 tonnes on Friday, its biggest one-day inflow in nearly three and a half years.
Speculators raised their net long position in gold for the third straight week ending January 13, US Commodity Futures Trading Commission data showed on Friday.
Liquidity was set to be thin on Monday with the US markets closed for a holiday.
Silver was down 0.5 percent at $17.65 an ounce, while platinum was down 0.4 percent at $1,259.99 an ounce and palladium was up 1.5 percent at $762.22 an ounce.
Palladium bucked the trend of the other precious metals last week to fall 6.1 percent, its biggest weekly drop since June 2013.
“Palladium...is suffering with its strong links to the industrial complex, producer selling and fund liquidation,” Marex Spectron said in a note.
Reuters