Gold climbs to 3-month high on weak economic data, dollar

Gold rose to a three-month high on Monday, extending its recent rally on worries about global economic growth and hopes for easier monetary policy after weak factory data in Asia and Europe.

China's official measure of manufacturing in January fell to the lowest since mid-2012, while factory growth across the euro zone slowed.

"That China data was disappointing, very weak in both manufacturing and non-manufacturing, which coupled with the ongoing turmoil on global markets and uncertainties about growth going forwards have helped gold to get above the $1,115/20 resistance level," said Robin Bhar, head of metals research at Societe Generale in London.

Data also showed that U.S. manufacturing activity was unlikely to recover in the near term, while consumer spending was flat in December.

Spot gold was last up 1.11 percent at $1,128.80 an ounce, after rising to $1,128.70, the highest since Nov. 3, just short of the 200-day moving average around $1,130 an ounce.

U.S. gold for April delivery settled up 1 percent at $1,128 an ounce.

Also supporting prices were the weak U.S. dollar against a basket of major currencies and comment by Federal Reserve Vice Chairman Stanley Fischer, who said that persistent volatility could hurt U.S. growth and inflation.

"Today's remarks seem to show some softening in his tone toward rate hikes, as he notes that he simply 'does not know' whether a March hike will be appropriate," said Royce Mendes, director and senior economist at CIBC Capital Markets.

"He concedes that financial market volatility could delay the tightening that he had anticipated earlier in the year."