Gold hovered near two-month highs on Monday, as escalating violence in Iraq and geopolitical tensions supported the metal's safe-haven appeal.
Bullion ended modestly higher in tentative trading, as investors refrained from making aggressive bets. Spot gold was little changed at $1,317 an ounce. The metal, which posted its best week in three months on Friday, rose to a two-month high of $1,321.90 in the previous session, although it closed down 0.5 percent. U.S. gold futures for August delivery settled up $1.80 at $1,318.40.
With the higher prices, physical demand from top consumers China and India has been slow to pick up, adding to the gloom brought on by stronger equities. Asian stocks rose on Monday after Wall Street advanced to new highs and fanned risk appetite. Gold is considered an investment-hedge, and is often bought during times of geopolitical and financial uncertainty.
Traders said physical demand across Asia has been subdued as many expect gold prices to fall further. Demand is also being hurt by large purchases last year, when gold prices fell 28 percent, and earlier this year.
Meanwhile, bullion is being supported by geopolitical tensions. Iran's supreme leader accused the United States on Sunday of trying to retake control of Iraq by exploiting sectarian rivalries, as Sunni insurgents drove towards Baghdad from new strongholds along the Syrian border.
--By Reuters. For more information on commodities, please click here.