 "Asia gold edges up as dollar eases from six-month peak")
The $85 billion automatic spending cuts in US government programmes, known as the "sequester", kicked off on Friday in the absence of a deal among lawmakers. Investors will be watching for its impact on the economy.
FUNDAMENTALS
Spot gold had risen 0.3% to $1,580.19 an ounce by 0043 GMT, after hitting a one-week low of $1,564.44 in the previous session.
US gold was up nearly 0.5% at $1,579.90.
President Barack Obama formally ordered broad cuts in US government spending on Friday night after he and congressional Republicans failed to reach a deal to avert automatic reductions that could dampen economic growth and curb military readiness.
But vigorous manufacturing data, together with strong auto sales and a rise in consumer sentiment in February, suggested a pickup in economic growth, offsetting concerns about the impact of the spending cuts.
Hedge funds and money managers increased their net long gold futures and options positions in the week to February 26 from a more than four-year low hit a week earlier, Commodity Futures Trading Commission data showed on Friday.
In contrast, sales of American Eagle gold coins rose sharply year-on-year in February, and silver coin sales posted their strongest performance for the month since 1986, highlighting strong safe-haven buying amid economic uncertainty.
SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, said its holdings inched down on March 1 to 1,253.885 tonnes in its ninth consecutive session of decline.
MARKET NEWS
US stocks advanced modestly on Friday, leaving the S&P 500 with slight gains in a volatile week as strong economic data overshadowed growth concerns in China and Europe and let investors discount the impact of expected US government spending cuts.
The dollar index held near a six-month high hit in the previous session. A stronger greenback makes dollar-priced commodities less affordable to buyers holding other currencies.