Gold settled higher on Monday as the dollar fell on uncertainty about global economic growth, while the prospect of more economic stimulus from China also increased bullion's investment appeal.
Gold was on track for its fifth rise in the past six sessions after the dollar index fell on growth concerns and worries that the Federal Reserve may wait longer to hike U.S. interest rates. Last week, the greenback notched its biggest weekly loss in six months.
Also underpinning gold was Chinese economic data suggesting the economy likely grew in the third quarter at its weakest pace in more than five years. This had some investors speculating that Beijing may roll out more stimulus measures. Gold got a boost from a strong rebound in Chinese imports of industrial commodities in September.
But some market watchers said bullion looks vulnerable to further losses on an improving U.S. economic outlook. Last week, the metal tumbled to a 15-month low of $1,183.46, near a four-year low, following strong U.S. jobs data for September.
U.S. gold futures for December delivery settled $8.30 higher at $1,23.00 an ounce.
Spot gold rose 0.7 percent to $1,231 an ounce, having hit $1,237.30, its highest in nearly four weeks. Last week, gold posted its biggest weekly gain in four months, up 2.7 percent.
"While the potential for a short-covering rally could see gold extend its gains, we believe the bounce is likely to be short lived and remain cautious given the headwinds the macro environment presents," said Suki Cooper, precious metals analyst at Barclays Capital in New York.
Gains in gold, usually seen as a hedge against oil-led inflation, were limited by sliding Brent crude oil prices to their lowest levels since 2010.
Meanwhile, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a good proxy for market sentiment, fell 2.64 tons on Friday to 759.44 tons, its lowest level since December 2008.
In the Asian gold trading, Singapore launched 25 kg (around 804 ounces) gold contracts on Monday, the latest Asian country to start exchange-traded contracts with the aim of providing a regional benchmark price.
The launch comes as Asia, home to the world's top two gold buyers, China and India, has been clamoring to gain pricing power over the metal and challenge the dominance of London and New York in trading.