SINGAPORE — Gold edged up despite a volatile euro on Monday, with movements exaggerated by thin trade due to the Lunar New Year break, while platinum and palladium hovered below their strongest levels in 17 months.

"I don’t think there are many other influences in the market, certainly in the Asian market anyway, beyond currencies right now. So I think it’s very much going to be the case of watch the dollar index," ANZ senior metals strategist Nick Trevethan said in Singapore.

"We could see prices push up a little higher, probably to $1,672.90. And the bottom is probably around $1,665. It’s a very narrow trading range."

In theory, a stronger dollar makes bullion more expensive for holders of other currencies, while rising oil prices should lift gold’s status as a hedge against inflation, dealers said.

Gold hit a high of $1,669.31 an ounce and stood at $1,667.96 by 6.37am GMT, up $1.07 from the previous close. Japan, China, Hong Kong, Singapore, South Korea and Taiwan are among the major centres in Asia closed on Monday for holidays.

US gold rose $1.80 an ounce to $1,668.70 an ounce.

Elsewhere, data from the US Commodity Futures Trading Commission could point to renewed interest in the metal as an inflation-hedge. Speculators raised net longs in gold by 4,845 lots to 86,926 in the week to Febraury 5, the CFTC’s Commitments of Traders report said.

Gold rallied to a record of about $1,920 in September 2011, when a worsening debt crisis in Europe sparked a buying rush.

The euro briefly dipped to a two-week low for a fleeting moment on Monday, while Brent oil futures fell slightly although data showing stronger than expected demand growth in China limited losses.

Platinum and palladium ticked lower in directionless trade. Year to date, platinum group metals have outperformed gold and silver on a combination of supply worries and recovering auto demand.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.23% to 1,326.89 tonnes on Friday from 1,329.9 tonnes on Thursday.

Reuters