New York 02/04/2012 - Gold futures closed 0.5 percent higher Monday, fuelled by healthy fund activity during the first trading session of the new quarter.

Comex gold for June delivery settled up $7.80 at $1,679.70 an ounce. Trade ranged from $1,664.40 to $1,685.40 in light volumes.

“This is the start of a new quarter and New Year for some and money appears to be flowing back into precious metals. This coupled with Chinese PMI figures released over the weekend have initiated a 'risk on' rally,” London-based broker Triland Metals said.

In data, US ISM manufacturing PMI came in at 53.4 points last month from 52.4 in February and above expectations of a 53.3 reading. Anything over 50 indicates economic expansion.

Elsewhere, Chinese officials reported that the nation's PMI for March came in at 53.1, easily beating a forecast of 50.8 and above the 51.0 tally for the previous month.

“The metals continue to base build above key support levels following the recent period of consolidation,” said MKS Finance SA.

“However, a breach of $1,645 may still have a potential to trigger deeper correction. The absence of China, which is out for the next three days for the Ching Ming festival and a shorter week in Europe and the US for Easter break should theoretically result in little business for the remainder of the week,” MKS added.

In the wider-markets, the dollar was steady at 1.3327 against the euro, while the Dow Jones industrial average and S&P 500 were up 0.39 percent and 0.73 percent, respectively.

In gold specific news, Indian retail merchants extended their strike to a 17th day to protest against a government plan to double gold coin and bar duties to just above 4 percent. The country's gold demand reached 933.4 tonnes in 2011, making it the world's largest consumer, according to the World Gold Council.

Gold imports in the second quarter are expected to total 150 tonnes, down from 250 tonnes in the corresponding three months of 2011. For the full year, imports are forecast at 700-800 tonnes, a drop of as much as 25 percent, according to the Bombay Bullion Association (BBA).

The Comex net speculative length added 70.4 tonnes to 514.6 tonnes last week, which marks the first increase in four weeks. This was the result of the addition of 49.9 tonnes in new speculative longs and the unwinding of 20.5 tonnes of shorts, according to CFTC data.

As for the other precious metals, Comex silver for May delivery ended up 61.4 cents at $33.098 an ounce. Trade ranged from $32.340 to $33.250.

Platinum for July delivery on the Nymex closed up $10.80 at $1,654.90 an ounce, while the June palladium contract ended at $658.80 an ounce, $4.70 higher.

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