Gold extended earlier gains on Monday to hit its highest since late February, with some investors drawn to the precious metal's safe haven properties as a radical bailout package for Cyprus shook sentiment in the euro zone.
The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but required the country's savers to pay up to 10 percent on their deposits, shaking confidence in banks across the continent.
(Read More: Cyprus Bailout 'Disaster' Risks new Euro Crisis)
Spot gold rose to a fresh high at $1,610.81 an ounce and was last seen at $1,604, up 0.8 percent.
U.S. gold futures rose above a 2-1/2-week high and ended the day $12 higher at $1,604.60 per ounce.
"The U.S. market coming in, with equity markets pointing to a lower start, gave a further push higher to gold... there is a bit of a flood into safe havens," Societe Generale analyst Robin Bhar said. "But whether that will last or not, it's still early to say... all the evidence we have now suggests gold shouldn't rally a lot further from here."
Analysts remained cautious as the details of the bailout were still to be unveiled, while the market awaited a Cypriot parliament vote on the measure on Tuesday and worried that depositors elsewhere in the euro zone might face levies.
"From a market perspective, people realize that contagion risk is real risk, so probably the deal will be reviewed," ING Investment strategist Koen Staetmans said. "So I think making big moves now is not yet appropriate, but it's clearly something to watch closely."
Gold's safe-haven appeal had tailed off dramatically in the past few months — with prices losing 3.2 percent since the start of the year — as investors grew more confident of economic recovery and moved towards assets perceived as higher risk like equities.
A series of positive economic data out of the United States and China and a stabilization in the euro zone also raised speculation that main central banks could turn off liquidity taps and stop pumping cash into the economies.
Less accommodative monetary policies would hurt gold, because higher interest rates encourage investors to take money out of non-interest-bearing assets.
Gold priced in euros rose 1.7 percent to a five-week high at 1,246.23 euros/oz, mostly gaining from the euro weakness against the dollar.
The single currency tumbled to a more than three-month low against the dollar, while European shares dropped from previous week's highs and U.S. stocks slid.
The next macro event is a U.S. Federal Reserve policy meeting on Tuesday and Wednesday, which is expected to give clues on the central bank's attitude towards aggressive monetary stimulus. Economists expected the Fed to keep buying bonds for the rest of the year to aid the still frail economic recovery.
Speculative Interest Rises, ETFs Down
Speculators raised net long positions in U.S. gold in the week to March 12 from a more than five-year low of 39,631 contracts to 43,195 contracts, but also increased short bets on gold, data from U.S. Commodity Futures Trading Commission showed.
But interest in exchange-traded gold funds remained lukewarm on Friday. Holdings of , the world's biggest gold ETF, resumed the decline after a two-day pause, down 3.311 tons to 1,232.996 tons, the lowest since October 2011.
Spot silver last rose 0.8 percent to nearly $29 an ounce.
Platinum was last down 0.8 percent at $1,576 per ounce. The metal has returned to trade at a discount to gold on worries over auto demand growth in Europe, which mostly uses platinum loadings in auto catalysts to clean up exhaust emissions. Palladium last fell 1 percent to $760 an ounce.
"PGMs are challenged by the aggressive extension in positioning and the current risk-off mood also contributes to these difficulties," broker UBS said in a note. "Some consolidation has already taken place since net longs hit record highs, but some more is needed in the short term, especially if concerns in Europe intensify."