Gold ends at new 3-1/2 month high as economy fears resurface

Source: World Gold Council

Gold settled at a near four-month high on Monday, adding to last week's gains as investors grew more anxious about the pace of the U.S. economic recovery and China's growth.

Weak U.S. manufacturing and employment data, and a slowdown in the rise in home prices in China for the first time in 14 months in January, raised fresh concerns over the health of the world's biggest economies, drawing investors towards gold, often seen as an insurance in times of troubles.

U.S. gold futures for April delivery settled $14.40 higher at $1,338.00 an ounce, its highest close since Oct. 30.

Spot gold rose more than 1 percent to $1,338.60 an ounce in earlier trade. It was last trading at $1,337, up 1 percent on the day.

It has gained more than 9 percent so far this year, following a 28-percent drop in 2013 that put an end to 12 years of gains.

Chart: Precious Metals

"Short-term sentiment towards gold is pretty positive, but the metal should break through $1,337 to gain further momentum," Sharps Pixley director Ross Norman said.

The dollar was little changed against a basket of main currencies, while U.S. stocks opened higher, with the leading S&P 500 index hitting a fresh all-time high.

Gold usually trades inversely to stock markets as investor risk appetite tends to diminish interest in the metal.

But lately shares markets have unusually risen in tandem with gold due to uncertainty over how signs of slowdown in the United States could impact the pace of the U.S. Federal Reserve's stimulus withdrawal. Both assets have benefitted by an increase in central banks liquidity over the past few years.

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—By Reuters