Gold rose to a one-week high above $1,650 an ounce on Tuesday, on course for its fourth straight session of gains, as hopes for more monetary easing by the Federal Reserve and resilient physical demand in Asia supported sentiment.
It was the first trading day for a number of markets after the Easter holiday, during which disappointing US jobs data breathed new life into hopes for more money-printing from the central bank, which would benefit gold as an inflation hedge.
Physical gold demand got a lift from Indian jewellers who had been absent from the market for the past three weeks.
"There is some physical gold demand in Asia, although the volume is not high," said a Tokyo-based trader. "They need to stock up anyway despite the relatively high prices."
Spot gold rose 0.7% to a one-week high of $1,652.55 an ounce, before easing to $1,652.46 an ounce by 0258 GMT (0728 IST). It dropped to a near three-month low just above $1,610 last week.
US gold gained 0.6% to $1,654.
Technical signals for spot gold were mixed as the metal hovered around the resistance at $1,648 level, said Reuters market analyst Wang Tao.
Investors will keep a close eye on more data and speeches from various Fed officials this week to look for cues on the health of the economy and the US central bank's attitude to monetary easing.
"We still prefer gold despite an extended period of profit taking in Q4 '11 and renewed volatility in Q1 '12," said Goldman Sachs in a research note.
"Negative real interest rates, the prospect of further unconventional monetary policy in the US and Europe to confront uncertainties on the growth outlook, and heightened political tensions in West Asia are all expected to underpin strong investment demand."
The euro zone debt crisis dragged on as investors apparently lacked confidence in Spain's ability to handle its finances, reflected in a poorly received debt auction last week.
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