Gold was trading near its highest level since early September on Wednesday, supported by concerns over slower economic growth in China, although expectations Asian physical demand may slacken kept the gains in check.
Worries over the fate of the global economy heightened this week after China said third-quarter growth was the slowest since 2009, lifting the appetite for safe-haven assets such as gold.
Spot gold was little changed at $1,248.69 an ounce by 0624 GMT, not far below Tuesday’s peak of $1,255.20, which was its highest since September 10.
US gold futures eased 0.2 per cent to $1,249.20 an ounce.
Gold’s relative strength reflects the continued uncertainty in the global economy, said Yuichi Ikemizu, branch manager at Standard Bank in Japan.
“Gold and other metals have been a bit oversold and $1,200 is quite a solid support level. We have also seen Chinese buying this month that has supported gold,’’ said Ikemizu.
Bullion has risen more than 3 per cent this month after tumbling 6 per cent in September in what was its steepest monthly drop since June 2013 following a rally in the US dollar.
Outside China, efforts are underway in Europe to revive a flagging economy. The European Central Bank is considering buying corporate bonds on the secondary market and may decide as soon as December with a view to begin purchases early next year.
Jason Cerisola, metals dealer at MKS Group, said in a note that gold could come under pressure in the coming days as demand from top consumers China and India tapers off.
Buying from India has accelerated in recent weeks ahead of the Diwali festival on Wednesday.