Gold climbed to its highest in nearly six weeks on Monday as a dip in equities lifted bullion's safe-haven appeal and improved investor confidence in the metal.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 7.49 tonnes to 797.05 tonnes on Friday - the first increase in a month.
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Data from the Commodity Futures Trading Commission also showed on Friday that hedge funds and money managers raised their bullish bets in gold and silver futures and options for a third week amid a decline in stocks.
Spot gold hit $1,259.46 an ounce early in Asian trading - its highest since Dec. 11. By 0803 GMT, it had dropped back to $1,254, inching up 0.03 percent on the day.
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The metal, often seen as an alternative investment, has posted four straight weeks of gains - adding 4.2 percent to its value. Gold dropped 28 percent last year after a 12-year rally on increasing optimism about a global economic recovery.
"A lot of our clients are still holding onto gold as a risk-event hedge," said Danny Laidler, head of ETF Securities' Australia and New Zealand business.
"I think the worst of the outflows is behind us. We think there is a greater potential for modest gains (in gold prices) this year than for a downside risk," Laidler said.
Prices were finding a floor near $1,200 as that was close to the cost of production, he added.
If gold prices were to fall below the cost of production, producers would be forced to shut loss-making mines, thereby creating a supply constraint that could push prices up.
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Among other precious metals, spot platinum gained after the main trade union for South African platinum miners said the workers will strike this week at the world's top three producers, hitting over half of global output.
Due to the recent rally in gold prices, Chinese gold demand - which has been robust ahead of the Lunar New Year holiday at the end of the month - has come off slightly as seen on premiums and volumes on the Shanghai Gold Exchange.
Premiums for 99.99 percent purity gold eased to about $14 on Monday from $17 on Friday.
China is the world's biggest consumer of gold, overtaking India last year.
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Data from China's National Bureau of Statistics showed jewellery sales in December rose 17 percent to 26.8 billion yuan ($4.43 billion), while sales for the whole year jumped 26 percent to 295.9 billion yuan ($48.91 billion).