Gold eased from four-month highs on Monday as investors cashed in some of last week's hefty gains, though prices were still supported by wider market volatility that 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, sending prices to their highest since September at $1,281.50.
While it edged back from that level on Monday, traders said that gold remained supported as the market braced for further volatility in a critical week for the euro zone.
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.
closed down 0.24 percent at $1,276.70 an ounce, but U.S. gold futures for February delivery were up $1.00 an ounce at $1,277.00. Spot gold is up nearly 8 percent this year.
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"Since the beginning of the year you've had several issues combined - economic anxiety in Europe, the euro dropping to a nine-year low, the ECB contemplating quantitative easing and Switzerland last week,'' Natixis analyst Bernard Dahdah said. "If you put them all together, you can see the reasons why gold prices are (higher)."
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, climbed 13.7 tonnes to 730.89 tons on Friday, its biggest one-day inflow in nearly 3-1/2 years.